Thirsty for work [Updated]
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Last weekâ€™sÂ jobs reportÂ may have capped off theÂ bestÂ six-month period since the recovery began, but the long-term unemployment situation is as terrible as ever. Nearly3.1 million AmericansÂ have been out of work for six months or longer â€” a third of all unemployed Americans. This isnâ€™t just a bad business cycle, saysÂ Nick Bunker. It has become structural problem in the labor market* (see update below). TheÂ 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 arenâ€™t hiring people to do them.
Catherine RampellÂ points toÂ new dataÂ 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. Sheâ€™s got a number of ideas on why this is happening, but sheâ€™s convinced that the one thing thatâ€™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 â€”Â something we havenâ€™t seen recently.
A 2012 paper from theÂ Boston FedÂ backs this up, saying the high rate of unemployment is pervasive across the entire economy, and therefore not the result of a skills mismatch.Â Ben CasselmanÂ sums up a more recentÂ NBER paper: â€śThe 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.â€ťÂ Danny VinikÂ looks at a number of factors, from labor-market dropouts to wage growth, and says that whatâ€™s happening isnâ€™t just a crisis, itâ€™s a national tragedy.
Thereâ€™s lots of debate about what to do next. One thing we definitely should not do, according toÂ 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.Â Dean BakerÂ says that we should bring the long-term unemployed back into the workforce by changing Americansâ€™ labor habits as a way to spread the work around, such as â€śencouraging firms to reduce work hours as an alternative to laying people off.â€ťÂ James PethokoukisÂ 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.
Thereâ€™s some hope, yet.Â Suzy KhimmÂ 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. â€”Â Jordan Fraade
On to todayâ€™s links:
* In fact, that’s not what Nick Bunker said at all. It was the opposite: “If you look atÂ their Beveridge CurveÂ 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.