Comments on: Unemployment: Strucs vs Cycs A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Robert287 Thu, 26 Aug 2010 05:33:07 +0000 Economists seem to think that structural unemployment is entirely about mismatch. What if jobs are simply being eliminated entirely? This has certainly been happening in manufacturing. The US is still the world leader in manufacturing output; we just don’t have the jobs because manufacturing has automated. Globalization can have nearly the same impact as technology, especially in cases like service offshoring.

A second point is that structural unemployment will CREATE cyclical unemployment…because if you lose your job because of technology (or skills mismatch) then you obviously will buy less coffee and less yoga….right?

Check out this book: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future. (Free PDF at

This book explains what economists seem not to understand. The impact thus far may be difficult to detect, but I think in the future it will become very obvious. Almost every sector will be hit heavily in the future.

By: TaxLawyer Thu, 26 Aug 2010 02:35:11 +0000 Housing prices are not the only impediment to moving. I am a lawyer/CPA who has been out of work for 11 months, since mass layoffs hit for those who weren’t bringing in enough revenues. I am a technician, and planner, not a country-club member who drums up business by establishing buddies from whom I can call up for business.

Being only licensed in MD, it would be a huge difficulty getting licensed in a new state without a job in hand. Why should I spend a lot of time studying for the FL bar exam and CPA exam, plus a whole lot of money, just to get licensed there without a job in hand. And I will get no job out-of-state without those licenses, so I am in a catch-22 due to the State licensing requirements.

By: Jules717 Wed, 25 Aug 2010 22:34:31 +0000 Dan Hess, youth under 20 can be paid $4.25 for their first 90 consecutive days with an employer.

By: Jules717 Wed, 25 Aug 2010 22:22:18 +0000 CDN_finance: the minimum wage 5 years ago was $5.15, which adjusted for inflation, was the lowest it has ever been since the 1940s.

By: peat Wed, 25 Aug 2010 19:43:59 +0000 @DanHess, come now, this is week 1 of econ101 stuff that you’re misapplying. You’ve learned in your econ101 about the assumptions behind the model of perfect competition[1], haven’t you?

Intra-township lawn care is not interstate commerce.

[1] petition#Necessary_assumptions

By: DanHess Wed, 25 Aug 2010 18:01:46 +0000 @peat, it is econ 101, which maybe you did not study in school. If the price is completely free to move, the market will clear. I am not discussing whether it is socially desirable to let the market-clearing price be so low. But we shouldn’t fix prices and then act surprised when the market doesn’t clear. It is precisely at the low levels near minimum wage where unemployment is through the roof, at depression-levels. age.htm
“Employees of firms that do not meet the $500,000 annual dollar volume test may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.”

Minimum wage therefore covers just about every business.

On another note, the shift in young people away from the skilled trades is a big source of the unemployment problem, according to Manpower. illed-workers-rb-1457929627.html?x=0&sec =topStories&pos=7&asset=&ccode=

By: peat Wed, 25 Aug 2010 16:48:47 +0000 Enterprises with <$500k/yr in revenue are exempt from the federal minimum wage. Most states have their own minimum wage laws too (Michigan, for example, is $7.40/hr). So there is nothing preventing that hypothetical teenager from working for $5/hr all summer long.

Whether looking at the macro-level or at the individual firm level, evidence of limited demand being the bottleneck to additional hiring is legion.

Let’s consider reality before letting loose with lazy-fairy ideological inclinations.

By: CDN_finance Wed, 25 Aug 2010 16:36:58 +0000 I partly agree with DanHess in that the minimum wage has risen too quickly for business to adjust. $7.25/hr is a pittance, but with full-time hours it gets one out of poverty. I don’t have the numbers in front of me, but wasn’t the minimum wage in America something like $4/hr only 5 years ago? That nearly 100% wage hike in such a short period is an enormous burden… the price is right, but the adjustment period should have been longer or some type of hiring credit available to help with the new cost of labour.
I also agree that some kind of apprenticeship or co-operative work experience mechanism should be in place, whereby kids/young adults can get experience in their field but perhaps work at a reduced rate for the chance. This really does benefit everyone – even though it opens up the opportunity for abuse.

By: DanHess Wed, 25 Aug 2010 15:58:09 +0000 In a hypothetical laissez-faire free market where employers are free to pay as little as they want and without a generous safety net (which we arguably have), I am certain that unemployment would be extremely low.

This is simple economics. The price of labor would move to a market clearing level.

Our Federal minimum wage has risen to $7.25 per hour and with taxes and benefits, is at around $10 per hour. This comes to around $1600 per month at minimum. In thriving cities, this minimum wage isn’t that much of a problem but in poor and rural areas, it completely ruins the functioning of the market. Felix, your playground is Manhattan. Out in Michigan or Arizona, if a teenager could make $5 an hour all summer long, it would provide a boost to his family’s finances and the local economy. He won’t starve and he’ll probably learn a lot and make more next year. Instead, the bottom rungs of the ladder don’t exist.

In China the average wage is somewhere around $200 per month. As long as companies have a fiduciary duty to their shareholders, high unemployment will be with us.

Deflation is very bad for employment at the lower levels in the face of high minimum costs. Inflation would reduce the impact of these high minimums, but we don’t have inflation presently.

The Strucs have it, IMO.

By: lambertstrether Wed, 25 Aug 2010 14:37:57 +0000 Maybe we could stop saying “unemployment” and start saying DISemployment?

The 10% nominal (20% real) numbers are the result of choices by our policy elite, and not accidents.