October 11, 2015

A Sensible Approach to Hard Core Unemployment

On the set of the film From the Rough, which I am producing and which is in production until November 5, I spoke with the film’s costume designer. She told me that there is a shortage of tailors, shoe repair people, and weavers everywhere she goes. I can believe what she says, because it is consistent with my experience. When my wife and I lived in New York City between 1981 and 1991, I needed to get a tear in a nice suit repaired. A Saks Fifth Avenue sales professional referred me to a weaver, an elderly Italian woman, who was the only weaver he could identify. She had a four-week backlog of work, and had hundreds of suits, trousers, and coats piled in her small retail space.

When I hear or read about the latest unemployment statistics, which, by the way, are significantly understated (the real unemployment rate is probably about 15-16% instead of 9.6%, since someone who is “discouraged” from seeking work is still unemployed, even if he or she is not formally applying for jobs), I get frustrated with the inflexible and short-sighted way in which governments and individuals are addressing the problem.

There are many people not working today who want to work. There are also many people seeking skilled workers who cannot find them. To some degree, the problem is geographic: there are jobs going begging in San Francisco, but the unemployed people may be trapped in a home they cannot sell in Cleveland or Detroit. However, even in less affluent communities, there are skilled tasks that could be done by people who are unemployed that are not being done, such as tailoring, shoe repair, and weaving. Individuals could do these tasks from their homes, which avoids the problem of child care, especially for women who have school-age children.

This is the kind of work that requires training and practice, but does not require years of schooling, a license, a certification, or an apprenticeship. There is also a shortage of automobile repair professionals, a task that requires training and certification, but only requires 8th grade level reading and math competency. I do not understand why individuals who need to make a living do not explore occupations that have severe shortages, that can create income opportunity, and that can be done by someone who does not have a even a two-year college degree.

When my wife and I visited Capetown, South Africa, in March, 2008, we were taken on a tour of some very poor townships. There were some inspiring stories of men and women who had been funded to start micro-businesses, such as a bed-and-breakfast house, a catering service, and, in one home, a business of sewing graduation and wedding gowns. In that home, the woman had received a donation of 12 sewing machines, and had purchased thread at a discount. She ran a thriving business from her home, and employed 11 other women.

What I also do not understand is that the United States is a wide open market in which people are now willing to order a product made or a service performed in one community for delivery in a geographically distant community. Products and services are sold on eBay and Amazon and other auction sites, but, for whatever reason, policymakers have not figured out how to take advantage of the export opportunities available from lower-income communities. Specialty food such as chocolate, pancake mix, and candy can be produced in one place and shipped to another.

I remember being an economically depressed part of Rochester, New York, the city in which I grew up. My wife and I went to an old-fashioned diner, which served excellent pancakes. My wife found out that the diner made its own pancake mix, and she ordered several sturdy bags for shipment to our Connecticut home. The pancake mix was shipped to us, and the owner told us that this was a vital part of her business. Food can be produced and packaged anywhere, as long as the producer meets adequate public health department regulations in preparation and packaging.

I have only identified a handful of economic development strategies for areas of high unemployment. The key to success in these areas is getting money from people, outside the area, who have it to people who do not have it. The other key to success is to find tasks that people of relatively low skills can with relatively little training and education. Improving our educational system is essential for longer term success, but it cannot address an unemployment crisis in the short term.

Sometimes we overcomplicate the creation and development of solutions. Some of this is the need for government officials to appear to be doing something big, such as creating large public works projects. Some of this is the need for businesses to focus on big projects, which actually have a lower chance of success, instead of a handful of smaller projects, which collectively have a much higher chance of success.

However, I think the biggest problem is simply a failure of imagination and creativity in economically depressed areas. People see themselves as victims of forces over which they believe they have no control, instead of seeing themselves as being the ability to take actions which will improve their lot. The best thing our elected officials could do for America is to convince them that much of what would help them is within their control.