Things Not to Do: Part XLIV
links for 2010-09-25

Larry Mishel on Structural Unemployment Once Again

Larry Mishel:

  • Claims that today’s unemployment is predominantly “structural” should be treated skeptically since that implies that people gainfully employed a year or two ago are now inappropriate for available jobs; The notion that work processes have dramatically changed over the recession, leaving millions of workers unqualified for work, is hard to square with the low levels of investment in equipment and software and the meager productivity growth, just 6.3% in two and-a-half years.

  • Though construction employment has fallen substantially, this has not fueled either unemployment or long-term unemployment as construction’s share of both unemployment and long-term unemployment remains very near its pre-recession level.

  • Claims that we are experiencing an anomalous rise in unemployment relative to job openings are not true: the same thing happened in the deep recessions of the 1970s and 1980s.

  • Lack of geographic mobility can’t explain unemployment since the 11 states with less than 7.0% unemployment would have to double their labor forces to absorb the unemployed.

  • There have been between five and six unemployed for every job opening (the job seeker ratio) since mid-2009, suggesting a shortage of jobs. The job seeker ratio is roughly double what it was in the last recession and reflects, in large part, that job openings are one-fourth lower now than they were in the last recovery.

  • In the first 12 months of this recovery there were 32.0 million job openings, 10.0 million fewer than the first 12 months of the prior recovery, one known for being a jobless recovery.

  • The shortfall of job openings in this recovery compared to the last one is pervasive: it is evident in nearly every sector including labor intensive service industries such as hospitality, entertainment, and accommodation. Construction is responsible for just 6% of the overall shortfall in openings in this recovery compared to the last one.

  • Layoffs during the early stages of this recovery are comparable to those in the prior recovery, and cannot explain high unemployment.

  • Hiring exceeds openings in the private sector more so now than earlier in this recession and more so than in the early 2000s recession...

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