Thirsty for work [Updated]

By Jordan Fraade
July 11, 2014

Not signed up for the Counterparties newsletter yet? Click here.

Last week’s jobs report may have capped off the best six-month period since the recovery began, but the long-term unemployment situation is as terrible as ever. Nearly3.1 million Americans have been out of work for six months or longer — a third of all unemployed Americans. This isn’t just a bad business cycle, says Nick Bunker. It has become structural problem in the labor market* (see update below). The Beveridge Curve, which tracks the relationship between the unemployment rate and job vacancies, has shifted outward, meaning there are lots of job vacancies, but more unemployed people than you would have expected had the pre-recession trend continued. There are plenty of jobs out there, Bunker says. Employers just aren’t hiring people to do them.

Catherine Rampell points to new data from NBER and Chicago Fed researchers showing that the average job opening is going unfilled for an average of 25.1 days, the longest vacancy rate since May 2001. She’s got a number of ideas on why this is happening, but she’s convinced that the one thing that’s not causing it is job seekers lacking the skills that employers want. If this were about the skills gap, she says, employers competing for a small pool of skilled applicants would be forced to raise wages — something we haven’t seen recently.

A 2012 paper from the Boston Fed backs this up, saying the high rate of unemployment is pervasive across the entire economy, and therefore not the result of a skills mismatch. Ben Casselman sums up a more recent NBER paper: “The high level of long-term unemployment during and after the Great Recession was driven by the lack of jobs and the difficulty of finding work after a long period of joblessness, not by characteristics [meaning skills] of the unemployed themselves.” Danny Vinik looks at a number of factors, from labor-market dropouts to wage growth, and says that what’s happening isn’t just a crisis, it’s a national tragedy.

There’s lots of debate about what to do next. One thing we definitely should not do, according to Robert Waldmann, is what happened last December: get rid of extended unemployment benefits. Waldmann writes that the conservative argument that the expiration of those benefits motivated people to find work in 2014 is not backed up by month-to-month employment data. Dean Baker says that we should bring the long-term unemployed back into the workforce by changing Americans’ labor habits as a way to spread the work around, such as “encouraging firms to reduce work hours as an alternative to laying people off.” James Pethokoukis suggests tackling the problem on a number of fronts, including tax credits for hiring, privatized job-training programs, and vouchers to help people move to places where they can find work.

There’s some hope, yet. Suzy Khimm notes that on Wednesday, Congress overwhelmingly passed a bill that streamlines federal job-training programs and gives private employers more say in how they work. — Jordan Fraade

On to today’s links:

Self-Promotional
A Cynking ship - Shane Ferro
Data’s drawbacks: The best way to commute is not always the fastest - Shane Ferro

Expensive Habits
The most expensive cities for expats aren’t anywhere near London or Moscow - Quartz

It’s Academic
A “peer review ring” has been busted - Washington Post

Data Points
The millennial daughter of the head of the Mortgage Bankers Association will continue renting, thanks - Lorraine Woellert

Servicey
For a hefty fee, the Awl’s staff will teach you how to dress - Shirterate

Rent-Seeking
Not everyone is upset about London’s banking shenanigans - Jason Karaian

So Hot Right Now
Unlisted real estate sales are a thing now - Carla Fried

Copy Wrong
Aereo would like to be considered a cable company - Aereo Blog
But its argument is probably going to fail –  Brian Fung

* In fact, that’s not what Nick Bunker said at all. It was the opposite: “If you look at their Beveridge Curve for economic recoveries going back over 60 years, you see the current shift is actually quite typical.” We regret that we erred in our original reading.

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/