Wednesday, November 10, 2010

High Unemployment Cyclical not Structural

Or so says the SF Fed:

An increase in U.S. aggregate labor demand reflected in rising job vacancies has not been accompanied by a similar decline in the unemployment rate. Some analysts maintain that unemployed workers lack the skills to fill available jobs, a mismatch that contributes to an elevated level of structural unemployment. However, analysis of data on employment growth and jobless rates across industries, occupations, and states suggests only a limited increase in structural unemployment, indicating that cyclical factors account for most of the rise in the unemployment rate.

Not really news to those who follow economics blogs where the point has been repeatedly made that if there is a mismatch of skills we should see some industries where wages are increasing rapidly as firms have to bid for scarce skills and other industries wages decline as there are too many workers with redundant skills. The evidence for this is just not there.

Which is good news in a way, there is no reason employment can't recover fully except for the fact that our consumers are seriously de-leveraging and we may not see the same level of consumer spending for a while.

1 comment:

Jeff said...

It is astonishing that the writer even feels the need to acknowledge the "analysts" who who argue that there is simply a "mismatch" of skills and jobs.

It really does feel like the "dark ages" have returned.