The goods on the 'Good Life'

The WSJ has an interesting article titled "Working Two Jobs and Still Underemployed."

It cites examples of people whose lives have changed during these economic times. These reveal a lot about how easy it had become to have a good life, while people working much harder in other countries were struggling to make ends meet.

The article describes a gentleman who was "laid off from a New Jersey battery plant in the summer of 2006. Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald's, whatever he could find."I thought it would be temporary," says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay..." *** How could someone with just a high school degree have that type of life while there are PhDs in other countries struggling to make one-tenth of $100K?***

The writer cites another example- "Among the underemployed is Marty Rasmussen of Walnut Creek, Calif., who was a banking executive for more than 15 years. He and his wife earned a combined income of more than $250,000 a year. As a hobby, he built cabinets and furniture.Two years ago, he was laid off by a big bank in San Francisco. While job-hunting, he volunteered to build cabinets for a local Lutheran church, and some fellow parishioners hired him to do work. His onetime hobby became his sole source of income. In the last year, he earned more than $10,000 replacing windows and installing crown molding. He just finished a pair of nightstands commissioned by a friend paying $700. His wife also lost her job this year and is collecting unemployment benefits. "It is hard transitioning from hobbyist, because I'm used to giving my work as gifts," he says..."

The article goes on to say that "...This means that nearly one in five people are either unemployed, involuntarily working part-time or "marginally attached" -- they want jobs but haven't searched in at least a month. It also counts "discouraged workers" who have stopped searching. "The number would be much higher if we included the mechanical engineers working at 7-Eleven," says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank. Melanie Donahoe might be one of them. The 56-year-old mother of three who lives in Stuyvesant, N.Y, has watched her gross income as a self-employed jeweler shrink from a peak of $55,000 to $40,000 when the recession set in, to perhaps $25,000 this year. " Between the recession and the high price of gold, it just keeps slipping and slipping," she says. This summer, she signed on for work as a government census taker, which paid $15 an hour and tided her over for a few months. Then, she joined a local Lowe's as a part-time cashier, earning $9 an hour. She hopes it leads to full-time work..."

It can be argued that compared to labor in other countries, the workers here have been grossly overpaid, and that this is a reversion to the "mean." The labor arbitrage is one of the enablers of this reversion. When highly qualified workers in other countries make far less than under-educated workers here, the situation is ripe for arbitrage.

The really sad part of the story is that the writer goes on to assert that "Eventually, employment will pick up..." Eventually we will all die. But the notion that the situation will go "back to normal" needs to be questioned. What is the "new normal?" Mr. Obama and Congress can spend other people's money like drunken sailors, but that does not address the fundamental issues- lack of good education and reliance on the easy life.