Why do a blog? Why now?

Everyone (well, not everyone in the world, but Cathy and Jan anyway) says I should do a blog. I'm not so sure, but there are ideas and opinions that sometimes seem clear to me and perhaps I should publish. Now seems like a good time to start.

A few words about the title:

It was only recently that I discovered the "life after that" quote, long after I had (unknowingly for most of the time) started to transition to my second life. In my first life I think I was surprisingly successful in making my way, largely without any real plan, through a series of interesting jobs, first in the Air Force and later as a consultant in Defense-related projects. Without really thinking about, and through hundreds of small decisions and non-decisions, I eventually had fallen into work that I was good at and really liked to do. I think a lot of people had figured this out well before I did and tried to tell me, but I didn't listen. Transition to my second life probably began around 9 or 10 years ago. I left a great management position to move to what was essentially a self-employed research and analysis contractor. No more managing other people, no more corporate responsibilities, and shorter hours and a much shorter commute. I worked with a great client team for the next few years until they began to retire or move on to other jobs. Work began to be less enjoyable with the their replacements and I began to think seriously about doing something else. I had been talking for years about moving back to Hawaii, what was I waiting for? When my wife Gail passed away in 2006, I was unable to answer the question "why am I doing this?" So in December that year I packed up, sold my condo, and headed back to Hawaii. My transition was over, my second life had started. But, like so many of the things in my life, it took me a couple years to figure it out.

Saturday, December 25, 2010

Recovery from Recession

The chart on the left was originally created by Dan DiMicco, the President and CEO of Nucor Corporation, one the largest steel makers in the US. Nucor is one of the best-run companies in the world and DiMicco has made some very clear (unlike the government) observations on the economy and the outlook for recovery from the current recession. He presented the chart back in July of 2009. All the data is his, except for the gray line extending the dark blue line at the bottom of the chart, which I have added.

The chart shows how long it took after the beginning of the last five recessions for the employment to recover. Mr. DiMicco made several points in presenting the information:
  • It has taken longer in each respective recession for job losses to recover: roughly 19 months in 1974, 28 months in 1981, 32 months in 1990, and 50 months in 2001.
  • The current recession is much deeper and accompanied by greater economic disruption than previous recessions.
  • It will take longer for job-losses to recover in this recession.

I thought at the time that he was correct, unlike various government officials from the President on down. Data available from the government since July 2009 (the gray extension of the blue line) confirms Mr. DiMicco's outlook. Just how much longer it will take for jobs to recover is any one's guess, but I see no reason to be optimistic. Consider the following:

  • Many of jobs lost in this recession are not coming back, ever. Companies that were financially on the edge prior to the recession failed and are not coming back. Some of those jobs went overseas, others were obsolete and will be replaced, if at all, by machines and streamlined business processes in other companies.
  • Many companies cut back employment through lay-offs. By necessity or prudent decision, they eliminated workers. Presumably, they dropped the least productive workers. What many companies have discovered is that the remaining workforce took up the slack and productivity improved. Job recovery in these companies will await business expansion, not just recovery to pre-recession levels. And for the employees that were laid off, reemployment with their old companies could be problematic.
  • As the economy recovers, employers will be cautious about bringing back or adding new employees. After all, the severity and shock of this recession and financial crisis were unlike anything in the memory of corporate managers. Outsourcing and new productivity tools (e.g., computers, robotic machines, and information processing) will be attractive alternatives to hiring.

This will continue to be a jobless recovery. With high unemployment rates, housing will be slow to recover, and in some communities may never recover. Without recovery in housing and real estate values, many state and local governments will be unable to meet current obligations to employees and level-of-service expectations of their citizens. Some industries and companies will do well, but overall it seems to me there is higher than normal risk in the stock and bond markets.

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5 comments:

  1. CathyDecember 25, 2010 at 5:12 PM

    What can I say? This is all too depressing. Was I really the one who suggested that you blog? How about some happy thoughts? Is there no silver lining anywhere? Ever? ARRGHHH

    ReplyDelete
  2. mossygirlDecember 28, 2010 at 5:37 PM

    I think it's interesting - I really like the graph and the continuation of the line. This being the first real recession to hit me as an adult, it's helpful to see the comparison to others that I grew up with, and benchmark the reality.

    I think the key factor is the advancement of technology and our new (and still growing) ability to "work smarter" or reinvent how we work, as well and how and what our companies market.

    While my company faced the recession and declining customer base/profit margin, they did so without large layoffs and more than anything by resorting to workforce attrition, which greatly slowed down as well with people realizing how tough it would be to find a 'better' job.

    The company responded by realizing that instead of working harder, they needed to retool themselves to work smarter - and while that sounds good, the reality is that I think we also realized we can get by with a lot less quality. This means lower quality product, performance and reliability. But with everyone doing it...

    Perhaps as a consuming public, we have become more accepting of limitations, or increased disposability due to quality loss?

    I wonder. Outside of technology, because it feels like there must be more to it than just that, I really wonder about what else is driving the ever slower recovery of jobs.

    ReplyDelete
  3. AaronJanuary 1, 2011 at 11:11 PM

    I think market and financial (maybe I should practice brevity and just say "economic") evolution is fascinating. The convoluted interplay of human psyche, science and greed really creates a never-ending ascension towards... what exactly?

    The continual evolution of a process should yield a better process, or we might at least think that periodic failures are resulting in better processes, thus making things better... of course that is assuming the pressures causing the "descent with modification" are themselves not fatally flawed (enter human psyche).

    I could read entries like this every day! I hope you feed us more.

    ReplyDelete
  4. AaronFebruary 27, 2011 at 8:02 PM

    This next post must be REALLY involved....... I mean, with all this time......

    ReplyDelete
  5. mossygirlApril 9, 2011 at 7:27 PM

    gosh this blog is quiet..... :(

    ReplyDelete

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