Welcome to the "New Normal"

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.


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?

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Carol June 08, 2012 at 11:24 AM
Great article Daryl.
Marty Rosalik June 08, 2012 at 07:39 PM
Daryl, a quote I like regarding present day situations. "There are many people who go from denial to despair without pausing on the intermediate step of actually solving the problem." Al gore
Daryl Patrishkoff June 09, 2012 at 12:25 AM
Marty, I agree with Al Gore! I guess I am surprised that this quote came from him, but it is very true. I plan on writing in further posts about the steps to making change, improvement and then on to a sustainable workable plan which is solving the problem. This is a process I have used over the years to help organizations improve and it is outline well in the book “American Icon,” which is my new favorite book. The steps are: 1. Understanding the New Normal 2. Acceptance of the New Normal 3. Identify Core Services 4. Shared Sacrifice 5. Expenditure Controls 6. Eliminate Non-Value Added Services 7. Right Size the Organization 8. Outsource Non-Core Services 9. Continuous Improvement Culture What I see our public organizations doing is minor cuts, deficit spending, raising taxes and kicking the can down the road without creating a plan that works. The point I am making is the tax payers have made the cuts and do not have any more money to pay additional taxes. The public sector needs to live within their means and operate to a budget.
Marty Rosalik June 09, 2012 at 02:56 AM
Daryl, the first 2 steps are somewhat similar to some programs that have 12 steps. You and I will probably dissagree on the remedy specifics and or need to raise some revenue, but without real cost control, why keep increasing taxes and cutting essential services to fund total systems that are outmoded? In your Identify Core Services sub section should be a comprehensice public discussion on what we as a community want and expect. We will most likely dissagree on what "we" consider "value added" diring that process. The requirements and needs versus nice to have and wants. Once requirements are defined, we need to determine what they are worth. And for Al Gore. He also said. "A zebra does not change its spots."
Daryl Patrishkoff June 09, 2012 at 11:16 AM
Marty, I believe we agree and are on the same page. I am not selling solutions, I am presenting the process to develop the solutions with a cross functional team of Stakeholders. All key areas are represented that work on developing the solution. The process outlined are the steps the complete Stakeholder Group goes through, this group represents all departments, customers, taxpayers, administration and others to ensure they all have equal input to the changes. The process is what they go through, I am not advocating a particular method of solution, this is how the Stakeholder Group develops and executes the solution they come up with. In my opinion and the case I am making is the tax payer has no more money to spend on increased taxes due to their personal trials, tribulations and reductions in wages and benefits. I am proposing the Public sector not raise taxes, but reduce costs and services that the tax payer can afford. Basically live within our means like we do in our personal and business budgets.


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