We all know the economy tanked when the real estate industry crashed. Much of our economy relied on the real estate industry, residential and commercial. However, it has been five years since the initial crash and the jobless rate is still almost three percentage points higher than what it used to be before the real estate crash. So what really are the main reasons why the jobless rate is still so high? In this article we will explore some of the reasons for the economy's current predicament and talk about the main reasons why the jobless rate is still so high.
Lack of Skilled Labor
The pace of technological advances has outpaced the supply of skilled labor. Millions of tech jobs are still waiting to be filled because companies are having trouble finding qualified candidates to fit the role. Yes, there are a lot of people who are struggling to make ends meet. However, there are also people out there who will have ten job offers at any one time and multiple companies bidding for their employment. Frankly, this is the result of a failed and overpriced college system that has not adequately prepared their graduates for the workforce. Students have paid up to six figures in order to get a diploma that is competitive in the workforce. However, many are finding that their degree does nothing but hang on the wall to collect dust.
Lack of Credit
Businesses rely on banks to fund their daily operations. Even if you are a Fortune 500 company, you will still rely on credit for your business. Businesses use banks to make investments, buy out other companies, and hire. But since the real estate crash, banks have been extremely conservative in lending, even to businesses. Because of the lack of credit, businesses were not able to operate at full capacity or expand as fast as they would like. For that reason, they were not able to create additional jobs in the workforce.
Businesses hire when they have an optimistic view of their business, their industry, and the economy as a whole. Pessimism will make businesses extremely tight with their cash as they prepare for the worst-case scenario. With the lackluster economy and the political bickering in Washington DC, who can blame them for being uncertain about the economy's future?
We all know that the catalyst to the high unemployment rate was the real estate bubble and proceeding crash in 2007 and 2008. That was what started everything. However, the real estate crash was not isolated to just the real estate industry. It opened up a world of problems for the economy as a whole. Now, half a decade later, the unemployment rate is still almost three percentage points above what economists would call the "natural unemployment rate" of 5 percent. Will we ever get back down to 5 percent? If so, how long will it take? No one can answer these questions with any certainty. However, many economists are tying the unemployment rate with the real estate market; many are predicting that the unemployment rate will only get better when the real estate market recovers. Is that true? We may know soon enough as the real estate industry is starting to show signs of life.
Felix Tarcomnicu has been blogging about business and career for the last 5 year years. He is currently writing CV samples for ResumeOK.