The US, State of Michigan and our local community has seen many recessions, sometimes we are hit harder than the average and other times we fair a bit better. Regardless, in these recessions we all take a hit and it hurts to be in hard times. Let me suggest that going through the hard times is not necessarily a bad thing. “What does not kill you will make you stronger”, welcome to the cycles of life.
I personally have seen and been affected by the documented US recessions we experienced in 1969, 1974, 1980, 1981, 1990, 2001 and 2007. In every recession there were a few key reasons that caused them, in hindsight they could have been avoided, no one has perfect eyesight. Hence the cycles of life, the good and bad times happen and we have to find our own way to navigate the mess. One does not navigate the mess by becoming the victim; they have to realize what has happen, how it will return, change themselves to be in position to thrive when the cycle returns differently. No one will do this for us, we have to take personal responsibility and change ourselves.
Every recession has a recovery, but when it comes back it is very different, what worked in the past will not be effective in the future. We need to study the reasons for the decline, understand how it will return and what the “New Normal” is. Jobs are directly affected by this and we all must reassess our skills and make sure we have the ones that will be in demand for the “New Normal.” I attached a PDF of the chart that tracks job losses in Post WWII recessions; they all act very different, but did return. However, the recession that started in 2007 has not seen the jobs return and a significantly slower recovery that may never return.
Is this is our “New Normal?”
Data from the US Department of Labor shows a major change in the “New Normal” we are now experiencing. Key data drivers that help understand the picture:
Item May 2011 May 2012 New Normal
Civilian population 239,313,000 242,966,000 Up, normal growth
Civilian labor force 153,449,000 155,007,000 Up, normal growth
Participation rate 64.1% 63.8 Lowest, in history
Employed 140,028,000 142,287,000 Up, behind growth
Employment ratio 58.5 58.6 Even
Unemployed 13,421,000 12,720,000 Down, record highs
Unemployment rate 8.7% 8.2% Down, moving up
Not in labor force 85,864,000 87,958,000 Up, many leaving
Persons who want a job 6,821,000 6,291,000 Down, very high
Long term unemployed N/A 5,400,000 Even, very high
Part time for economic reasons N/A 8,100,000 Up, no fulltime
Stopped looking for work 2,200,000 2,400,000 Up, giving up
Discouraged workers 830,000 830,000 Even, giving up
Other data that outlines the "New Normal" we are now in:
- 14.8% underemployed
- 16.1% 16 – 24 year olds unemployed
- 50% college graduated unable to find work within a year of graduation
After being on the front lines working with hundreds of technical professionals since 2008 I see their “New Normal” evolving. Wages are down, benefits have evaporated, security on the job has disappeared and many people are on their 3rd and 4th job since being laid off in 2007. This causes uncertainty in both businesses and peoples personal life and in many cases people are hanging on a thread to survive. Many more have lost their houses and in tragic cases the family was broken up with all the added stress of these difficult economic times.
The people that survived and then thrived in these times took on a proactive approach to change themselves to be in position to find meaningful employment. They had to wake up and motivate themselves to take charge of their situation and not follow the traditional path.
They acquired new skills to learn how to manage work effectively and become the change agent to do things more cost effective in the workplace. They educated themselves in these tools and techniques, worked for free at companies to apply these skills and demonstrate they know how to create value in the workplace. They used these “internships” performed for free as a discussion point with potential employers to get an interview and then close the deal on the job.
The “New Normal” on the private sector job front is managing your work to measurables that demonstrate the creation of value. The in-demand employee is the change agent that takes initiative to create more value in the workplace. Sounds like an employer’s dream employee, become that person!
This “New Normal” in the private sector has a direct relationship to the public sector. These private sector employees have been on a devastating roller coaster ride since 2007 and seen their property values drop dramatically. They are making less money, paying for more benefits, working longer hours and trying to find some type of security. They do not have any more money to pay more taxes!
After 4 years of a declining economy it is time for the public sector to realize their “New Normal,” the old ways are not coming back. Their funding is reduced based on tax collections being down, they are not going to return and the private sector will not sign up for higher taxes, they simply cannot afford it.
I have been told that the public sector trails the private sector by 1.5 years, it has been 4 years now and it is long overdue for the public sector to adjust to their “New Normal”. The public sector delayed the adjustment by spending the stimulus money, budget reserves, raising mileages’ and some budget cuts. They have delayed the inevitable and it is now time to take action. The only way to right the course is to take on the total structural costs with shared sacrifice like the private sector has done. A perfect example is the turnaround story of Ford outlined in the book "American Icon" which outlines the process to driving change as one adjusts to the "New Normal."
The public sectors “New Normal” is a greatly reduced tax collection and they need to adjust to a budget which is fiscally responsible and sustainable in the long term. If they do not make these changes they will go bankrupt like the other communities like: Detroit, Pontiac, Highland Park and many others who waited too long to face the facts.
The answer is not raising taxes; it is live within your means like we do in our private and business budgets. Spending money you do not have with promises you cannot keep is not a plan, it is radical to ignore the facts and not take immediate action.
When is the public sector going to accept the “New Normal” and build a plan that is fiscally responsible and sustainable?