It should be no surprise to anyone that the economy is not at its best.
With all the jargon about the Federal Reserve and banks, and the new health care plans, it is enough to make anyone confused about what is going to happen.
According to the Bureau of Labor Statistics, the national unemployment rate for July was 9.5 percent, which was unchanged from June and virtually unchanged from a year before when the rate was 9.4 percent.
Adam Gifford, economics department chair, said the financial bubble is to blame. The bubble, caused in part by bad U.S. policies, had way too many people employed in the economy.
“There were a lot of people in the wrong jobs,” Gifford said.
In a typical non-recession month, there are four billion jobs lost but four billion more subsequently created. But now the market is changing.
Gifford said what needs to happen is what some people call “recalculating the economy.” Today’s jobs are much more skills oriented and require more specialized training than before.
He added that it takes time to find the right fit for people. Even if someone has all of the necessary skills to be an engineer, when they go to a new job it still requires some more training specific to the company.
People may need to take pay cuts while they are being trained for new jobs, Gifford said. They will not be as valuable to the company while they are being trained.
In the long run, he said he is hopeful that the market will adjust and people will find jobs in which they can be productive.
Shirley Svorny, economics professor, said she believes that the government is somewhat at fault when it comes to the current economic issue.
“We are not doing things we need to do to promote strong recovery,” Svorny said.
One thing professors agree on is that the main problem when it comes to recovery is the uncertainty associated with it.
Robert Krohl, economics professor, said when there is uncertainty, businesses are hesitant to hire, invest and expand.
“It puts a real damper on things,” Krohl said.
Svorny said health care reform adds uncertainty.
People do not want to hire and make that investment in people if further down the line they will have to pay for rising health benefits, she added.
The economy plays a role in how these professors teach economics. Svorny said she usually uses current events as the basis for her term papers every semester.
“The advantage of economics is it gives you the tools for looking at public policy and current events,” Svorny said.
Krohl said he uses a model-based method of putting real-life events in a model to help students understand.
One example that he teaches in his classes is tax breaks. People think tax breaks are supposed to boost consumption, but the model explains that people save most of it.
Krohl added he has no idea what is going to happen, but his best guess is that the economy will continue to grow, just not as robustly as it has in the past.
Gifford said it all depends on the class.
When he teaches law and economics, he can use information about insurance, especially the new heath care reform, in his classes. Sometimes he uses information about taxes in other classes. The bottom line is it all comes down to tradeoffs and incentives.
“Economics teaches how important incentives are affecting behavior,” Krohl said.