One interesting aspect of this recession is that everyone seems to have an opinion about what’s ‘normal’ and in particular, what constitutes the ‘new normal.’
Brian Wesbury is chief economist at First Trust Portfolios in Wheaton, IL and author of the book It’s Not As Bad As You Think, to be published this month by Wiley. His view was recently outlined in the Nov. 16th Forbes.
Wesbury points out that despite a 26 year high in unemployment, the job market is much healthier than you think. Expanding and new companies last year added about 28 million jobs while contracting ones cut 31.4 million. In fact, according to the Bureau of Labor Statistics, altogether in the U.S. during the year ended last July, a total of 51 million people were hired and 57 million quit or were fired. That’s a lot of employment churn.
Causes include the recession, the panic that started last fall, and technology –a disruptive force that is changing the way goods are produced and consumed, and destroying companies who cannot (or will not) adapt. This causes huge displacements in employment, but as Wesbury points out, “no economy can create new jobs unless it allows the destruction of old ones,” be they newspapers, department stores or farmers.
The change brought about by technology brings prosperity, but at a price. Think Detroit. Wesbury (and Forbes) hone their daggers and point them at misdirected governmental intervention, ill-advised raises in the minimum wage and taxing profitable sectors to rescue those in decline. These are common themes with Forbes, and no doubt some economists.
But the real point is clear: technology eventually (and always) wins. Most future jobs will require tech-savvy employees working in companies who have put real effort into aligning their business goals with their technology platforms and initiatives. Ultimately, technology is the biggest source of churn and, in the long run Wesbury points out, the greatest source of hope.
Even at our small company, we’re actively engaged these days with multiple, smart client companies who are upgrading their technology and processes now, cutting costs now, and leveraging their tech investments in order to be well positioned during the recovery to take advantage of whatever form the ‘new normal’ may take.