Monday, April 15, 2013

The Inside Job On The Jobless Continues

Just a friendly reminder from The Atlantic's Matt O'Brien that the number one threat to America right now is long-term unemployment becoming structural because Republicans keep blocking every single effort to put Americans back to work.

There are two labor markets nowadays. There's the market for people who have been out of work for less than six months, and the market for people who have been out of work longer. The former is working pretty normally, and the latter is horribly dysfunctional. That was the conclusion of recent research I highlighted a few months ago by Rand Ghayad, a visiting scholar at the Boston Fed, and William Dickens, a professor of economics at Northeastern University, that looked at Beveridge curves for different ages, industries, and education levels to see who the recovery is leaving behind.

Okay, so what is a Beveridge curve? Well, it just shows the relationship between job openings and unemployment. There should be a pretty stable relationship between the two, assuming the labor market isn't broken. The more openings there are, the less unemployment there should be. If that isn't true, if the Beveridge curve "shifts up" as more openings don't translate into less unemployment, then it might be a sign of "structural" unemployment. That is, the unemployed just might not have the right skills. Now, what Ghayad and Dickens found is that the Beveridge curves look normal across all ages, industries, and education levels, as long as you haven't been out of work for more than six months. But the curves shift up for everybody if you've been unemployed longer than six months. In other words, it doesn't matter whether you're young or old, a blue-collar or white-collar worker, or a high school or college grad; all that matters is how long you've been out of work.
And these are the folks falling off the labor participation rate at the rate of thousands, if not hundreds of thousands per month.  What's horrible is that both sides recognize the problem, but that only one side wants to do anything about it, and the other side is blocking all efforts.

President Obama proposes large-scale infrastructure projects which will put Americans to work, and proposes large-scale job training efforts to get Americans the skills they need to fill the new jobs.   Republicans blocked them both.  Instead, they figure if they can cut taxes and then cut government spending on jobs programs, jobs will magically be created.

Republicans are keeping Americans unemployed on purpose. They hope you'll blame Obama and either stay home or vote GOP as a result.

Please let that sink in.

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