By Mohamed A. El-Erian
At its root, America’s jobs crisis is the result of many years of under-investment in human resources and the social sectors. The education system has lagged the progress made in other countries. Job retraining initiatives have been woefully inadequate. Labor mobility has been declining. And insufficient attention has been devoted to maintaining an adequate social safety net.
These realities were masked by the craziness that characterized America’s pre-2008 “Golden Age” of leverage, credit, and debt entitlement, which fueled a gigantic but unsustainable boom in construction, housing, leisure, and retail. The resulting job creation, though temporary, lulled policymakers into complacency about what was really going on in the labor market. As the boom turned into a prolonged bust, the longer-term inadequacies of the job situation have become visible to all who care to look; and they are alarming.
Left to its own devices, America’s unemployment problem will deepen. This will widen the already-large gap between the country’s haves and have-nots. It will undermine labor’s skills and productivity. It will accentuate the burden imposed on the gradually declining number of people who remain in the labor force and have jobs. And it will make it even harder to find a medium-term solution to America’s worsening public-debt and deficit dynamics.
Full article here: Sleepwalking through America’s Unemployment Crisis by Mohamed A. El-Erian – Project Syndicate.
