Tuesday, July 6, 2010

JOBS AREN'T COMING BACK....Big surprise.

See the enclosed NY TIMES report - Aptly titled " Jobs aren't coming back" - Bet you POTUS wonders why his pals over there at the NYT aren't doing another glowing tribute to him and his pretentious cow of a wife... I can hear her now, " Honey, weren't they supposed to write another story about my garden????" - Meanwhile, others are growing gardens beacuse if they don't, they will not likely have enough to eat.....aaaaarrrrgggghhh.....stop screwing around and just "FIX the Problem".....POTUS is likely too busy trying to figure out what to write in his next autobiography (HE has TWO....yes - you read that right - TWO. God Bless.

Jobs That Aren’t Coming Back

I had an
article today about structural unemployment — the idea that some people are out of work not only because demand is relatively weak, but because their skill sets don’t match what employers want (for example, they are highly specialized auto workers, but the only local job opening is for an oncologist). The typical causes of structural unemployment are the three T’s: trade, technology and changing tastes (e.g., consumers want more iPods and fewer C.D. players).
We care about structural unemployment because it means many of the jobs lost during the Great Recession may not come back in the recovery. And that has important implications for public policy, and how the government can or should be helping the jobless.

Cyclical forces and structural forces are hard to disentangle, especially since structural forces, like a long-term decline in American manufacturing, generally accelerate when demand is especially weak and businesses feel especially pressured to cut costs and find more efficient ways of getting things done. A weak economy can also give employers an excuse to trim less productive workers whom they would have let go eventually.

We’ve seen this phenomenon in previous recessions, and
this paper by Erica Groshen and Simon Potter does a nice job of laying out a few reasons why structural unemployment may help explain the “jobless recoveries” following the last two recessions.

Of course, it’s hard to know how much structural unemployment there is right now. We probably won’t know for sure until the job market fully recovers in a few years, and we see what types of jobs people who are currently unemployed are able to find.

In the meantime, one particularly concerning piece of evidence supporting the structural unemployment hypothesis, though, relates to long-term unemployment.

In previous recessions, there seemed to be a lot of churn in the job market. Many people got laid off, but they generally spent a few weeks unemployed before being cycled back into a new job (not necessarily a position as good as the one they’d lost, but a new position nonetheless).
doesn’t seem to be the case for the recession that began in late 2007.

The chart above shows the percent of all workers who are unemployed, broken down by how long they’ve been out of work.

Source: Bureau of Labor Statistics

Take a look at the dark blue line, which refers to people who have been out of work for more than 27 weeks. That line has climbed and climbed for months, and is at its highest level on record even though we have had
four consecutive months of net payroll growth.

Think about what that means: The new jobs that have been created so far seem to be going disproportionately to people out of work for only a short period (and perhaps also to people who already had a job and just changed positions or took on additional work). Meanwhile, people who were unemployed six months ago
still can’t get a job. Rather than their prospects improving, they appear to be falling further and further behind, racking up more and more weeks of idleness instead of paychecks.

Perhaps there are other reasons for the inability of long-term unemployed workers to get hired — stigma, for example, regarding the yawning gap in their résumés — but structural forces seem like a plausible explanation.

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