Mohamed El-Erian on Unemployment and Back-of-the-Envelope Jobs Calc

Mohamed El-Erian hits all the right notes – Sleepwalking through America’s Unemployment Crisis:

“With virtually no earned income and dwindling savings, the unemployed are least able to manage the current surge in gasoline and food prices, they are effectively shut off from credit, and many have mortgage debt that exceed the value of their home. These and many other facts speak to an unpleasant and unusual reality for the United States. The country now has an unemployment problem that is large in magnitude and increasingly structural in nature. The consequences are multifaceted, involving immediate personal anguish, rising social and political tensions, economic losses, and budgetary pressures. This is much more than a problem for the here and now. High and intractable unemployment has serious negative long-term consequences that threaten to become exponentially worse. This is a crisis. Substantial international research shows that the longer one is unemployed, the harder it is to get a job. This erodes an economy’s skills base and saps its long-term productive capacities. And, if unemployment is particularly acute among the young, as is the case today, too many of the unemployed risk becoming unemployable. Undoubtedly, the Great Recession triggered by the global financial crisis has contributed to this worrisome situation. Unfortunately, the problem is much deeper, as it was long in the making.”

I was reading the news that Panasonic is planing to shed another 17,000 jobs. This will bring the total number of workers at Panasonic to 350,000. But their current employment level is sill double of the three leading American companies combined!

Google – 26,316 employees
Apple – 46,600 employees
MSFT – 86,000 employees
Total 188,232 employees

One can argue that Panasonic is a hardware company but so is Apple and to the extent even Google and Microsoft. Except all the hardware and manufacturing is by the Taiwanese/Chinese Foxconn and they have close to a million (with an m) employees as I wrote. It’s “structural” all right.

Tagged as: economy, jobs, recession, unemployment