How Long Will it Take for Jobs to Come Back?

I used to read chapters from Greg Mankiw's introductory economics textbooks in grad school, when I took seminars in international political economy. Mankiw blogs, but he's quite the opposite of Paul Krugman: more conservative and, especially, humble. We can see that in his essay yesterday at the New York Times, "Three Questions for America's Financial Future." On the jobs picture:

Looking ahead, an open issue is whether the recession will leave scars that prevent a return to jobless rates that were considered normal just a few years ago. A striking feature of today’s labor market is the rise of long-term joblessness. The average duration of unemployment is now almost 40 weeks, about twice what it reached in previous recessions. The long-term unemployed may well lose job skills and find their future prospects permanently impaired. But because we are in uncharted waters, it is hard for anyone to be sure.

Actually, one of my favorite writers of all is Victor Davis Hanson. A classicist and military historian, he's also unmatched on political and social commentary on issues ranging from culture to farming to immigration. See his essay from Saturday, "Thoughts on a Surreal Depression":

Here in Fresno County, in the heart of California’s San Joaquin Valley, the official unemployment rate in February to March ranged between 18.1 and 18.8 percent. I suspect it is higher in the poorer southwestern portions, especially near my hometown of Selma, about two miles from my farm.

Since 2000 we have both lost jobs and gained people, and the per capita household income is about 65% of California’s average, the average home price about half the state norm.

In some sense, all the ideas that are born on the Berkeley or Stanford campus, in the CSU and UC education, political science, and sociology departments, and among the bureaus in Sacramento are reified in places like Selma — open borders, therapeutic education curricula, massive government transfers and subsidies, big government, and intrusive regulation. Together that has created the sort of utopia that a Bay Area consultant, politico, or professor dreams of, but would never live near. Again, we in California have become the most and least free of peoples — the law-biding stifled by red tape, the non-law-biding considered exempt from accountability on the basis of simple cost-to-benefit logic. A speeder on the freeway will pay a $300 ticket for going 75mph and justifies the legions of highway patrol officers now on the road; going after an unlicensed peddler or rural dumper is a money-losing proposition for government.

The subtext, however, of most of our manifold challenges here in the other California are twofold: we have had a massive increase in population, largely driven by illegal immigration from Latin America, mostly from Oaxaca province in Mexico, and we have not created a commensurate number of jobs to facilitate the influx.

I often ask business people on the coast why there are not more industries in places like Selma other than agricultural related work that is locale specific. I would sum up their responses as something like the following: Our workforce does not have the educational and linguistic skills to justify, in global terms, the amount of wages and benefits necessary to employ them, hence jobs are mostly in service and government. Software engineering, computers, or Silicon Valley-like industry are out the question. But apparently so are large manufacturing jobs, despite an abundant workforce. As I understand employers, they seem to suggest that steel pipe, electrical wire, or radios would not be better manufactured or fabricated here, and yet still cost two to three times more than a counterpart assembled abroad.

In addition, they believe that the state government would look upon any employer of a large industry not as a partner that would alleviate unemployment and lessen county expenditures, but more or less a sort of target to regulate, advise, lecture, and chastise, both to justify the expanding government regulatory work force and to achieve a fuzzy sort of social justice. There are, of course, large plants and businesses here, but hardly enough to absorb the thousands entering the work force.

The result is about one in five adults is not working in the traditional and formal sense. A morning drive through these valley towns confirms anecdotally what statistics suggest: hundreds, no, thousands, are not employed. Construction is almost nonexistent. Agriculture is recovering, but environmentally driven water cut-offs on the West Side (250,000 acres), increasing mechanization, and past poor prices have combined to reduce by tens of thousands once plentiful farm jobs.

My dad moved to Fresno in the mid-70s and I graduated from Fresno State in 1992. If you ever want to get the feel of what it must have been like during the Great Depression, take some country drives around the Central Valley --- in towns even more remote than Selma --- and you'll be taken back into your own Grapes of Wrath experience. The Democrats make this bad enough, but it's a statist anti-entrepreneurial regulatory stranglehold that's killing employment and the quality of life for large segments of society. I'm noticing it even in parts of the O.C., where unemployment was less than 2 percent in 2000. Hope for the best, I guess, but prepare for the worst.