Monday, February 8th, 2010
Yes and No!! That’s the honest truth and that’s the way it’s been throughout history in an innovative and vibrant economy like ours in the U.S. Some jobs constantly disappear while new ones are being created. Unfortunately, the job destruction part often comes harder and faster than the job creation part.
Just a decade ago, we experienced the Dot.com bust in this country. The “new” economic paradigm came crashing down and the “old” economy survived despite its foretold demise. The bloated workforce dedicated to an industry that seemed to go from infancy to adulthood in the span of less than five years, found itself decimated. Those Dot.com jobs have not been restored. But the technology that spurred the meteoric rise of the Dot.com industry did not die. And steadily over this last decade, continued advances in the area of telecommunications have spawned innumerable jobs in our economy.
A decade before that, we experienced the S&L crisis, where a large number of savings and loan organizations met their untimely demise through their own mismanagement. That was just as their future seemed glorious in the aftermath of the industry’s deregulation by Congress. The housing industry came to its knees. But it did not die; slowly and steadily, after the bloated inventory of second and third homes became absorbed into the economy, housing once again became a vibrant industry.
And only ten years before that, we lived through the rise and fall of the energy industry. With oil prices hitting $40 per barrel in 1980, (that was the equivalent of over $100 today) workers in the northern states were leaving “the rust belt” as the manufacturing heartland of this country was dubbed, to head for the “gold” in the oil fields of Texas. The migration was huge, raising real estate prices in the Southwest and decimating them in Michigan, as auto workers became oilfield workers. And then hardly a year after the peak in prices, it all ended. The price of oil came crashing down and oilfield millionaires turned into oilfield bankrupts. Homeowners abandoned their mortgaged houses and the State of Texas was the least exciting place to live.
This go round is really no different in its nature. An industry, in this case the banking/mortgage industry, brought about its own destruction. By using borrowed money with abandon in order to grow, by encouraging its customers to pile on debt and by lowering its own standards for lending, the banking industry sowed the seeds of its current crisis. Now, as the industry shrinks from its bloated size, it is shedding employees that were needed only when it was overweight. A trimmer industry will emerge and some people will be hired back, but not to the levels of just two years ago.
But fear not, the spirit is willing even if the flesh is weak. That entrepreneurial spirit is alive and well in the U.S. New industries will arise and they will create new jobs – green jobs, telecommunications jobs, jobs in industries without a name as of yet. It will take time and that is the frustrating part. And a decade from now, a new economic crisis will raise its ugly head to prove yet again that trees do not grow to the sky.