What people don’t realize is that the employment problem in this country isn’t a cyclical issue, it is a structural issue. A structural issue that isn’t easily or quickly solved.
This country has millions of workers that do not have the skill sets necessary to compete in the new global economy. Furthermore, the country has millions of workers who expect a higher wage than the global market dictates – hence, the flight of jobs to other countries with cheaper labor. Unfortunately, in order for jobs to flow back to the U.S. there will need to be a standard of living shift and American workers will need to accept a lower wage and lower standard of living. Of course, they will kick and scream but this is a process that is unavoidable.
Additionally, as commodity prices increase due to Fed policy, businesses are soaking up the extra input cost and compensating for it by keeping their labor costs as low as possible. Of course this means that even as corporations finances improve, they still don’t hire anyone.
Lastly, as we move forward, it’s apparent that we won’t be returning to the economic levels of a few years ago. There simply isn’t the growth to hire all the workers that need jobs. A few years ago we had millions of workers selling mortgages, millions of workers building homes, millions of people working as real estate agents. These industries have been slashed immensely and the remaining jobs are few and far between.
The employment problem is structural, and it requires structural solutions. The Fed holding interest rates low and printing money is not a structural solution therefore do not expect it to do anything to improve our real economy.
Economy, Federal Reserve