It is far better than anyone wants to admit!

Lets talk economics.  I know many of you don’t like economics and even more of  you did poorly in it at college.  The key is you went to college and in today’s US economy, there is nothing more important than having gone to college.

The premise for the rest of this discussion is that our economy, the US economy, is doing great.  I know that both sides of the isle do not want to talk about it, but from a utilitarian point of view and that of the middle class and up, our economy is strong, effective, efficient and most of all, stable and in good shape.

Our banks are strong, our businesses are making money, our trade is improving, our dollar is weak (this is good for economics) and people are spending money.  This leaves the only issue of contention, employment.  Out of 20 articles I have read recently, almost all discuss employment as the proof of our failing economy.  In fact, many of these articles discuss it as the only issue.

There is one piece of information that both parties agree is too sensitive to discuss,  unemployment distribution.  I am talking about the unemployment rate between white collar (I define as college educated) and blue collar America. No one wants to point out that the unemployment rate for those with a college education is 4.4% (the Atlantic, July 14th 2011) .  What makes this amazing is that natural unemployment is 5% (CBO, 2007).  This implies that we have NO unemployment for those with a college education.  Yes, I read CNN and FOX News too.  Yes, they tell stories about people being out of work for ever and the plight of the college grad.  Out of millions of people, there will always be poeple who suffer.  Problem with this, is that at the macro level, college educated people never suffered during the recession and always had their jobs.  You can deny it but the facts speak for themselves.  The unemployment rate for College Educated people never rose above a natural unemployment rate.  The educated, never suffered from a recession.

Now here is the sensitive part, those with a high school diploma are at 10.8%  and those with no diploma are at 14.3% unemployed (Howard Gold, Oct 2010).  We already know the rich are getting richer and the poorer are getting poorer.  What we did not know was is that the educated are keeping their jobs and the uneducated are not.

Now why does this make for a great economy.  The unpleasant truth is that our blue collar labor pool  costs too much.  The mass of jobs available for individuals without a college education tend be in areas that are exportable, most notably, manufacturing.  The underlying problem is that our blue collar labor force costs too much.

Economic cycles exist to bring demand and supply and the relative expenses and incomes of demand and supply into balance.  As we have priced ourselves out of the blue callor world labor market, our domestic demand for these resources have shrunk.  Growing unemployment is the tool by which costs for labor are forced down.  Over time, the reduction in labor price brings demand back.

No one, including conservative business centric Republicans, want to say to the unemployed, “Hey, it is a good thing you are out of work, we need to drive down the cost of labor.”  Oh, by the way, the rest of us are doing fine so tough it out!

There is much to learn from this.  One of the most obvious is get an education.  As world markets open and technologies improve, blue collar labor demand will continue to decline.  If we do not prioritize education, we are going to see the divide between economic classes grow and social, political, and economic conflicts expand.

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