Asymmetric Recovery
By one measure, the labor market has not recovered at all. By another, the recovery is complete.
The red line in the chart below is a monthly index of the employment-to-population ratio, normalized to a value of 100 in December 2007, when the recession began. In this series, each employed person counts the same, regardless of how many hours she or he works.
The blue line shows the average number of hours worked by people with jobs in the private sector. In this series, only people with jobs are included in the calculation.
Unlike the employment-to-population ratio, average work hours have largely recovered since 2009. Earlier this year, the average hours series reached 100, which was its value for much of 2007.
Can this asymmetric recovery be explained by ObamaCare? See full Casey Mulligan post.
The author has a lot of theories that all mean the same thing: unemployment is a problem. Politics and seperate opinions will stall any action to solve this.
Has the fact that hours worked is back to 2007 levels resulted in output returning to 2007 levels? I think not, given that each worker’s last marginal hour is probably much less productive than his first.
I’ve heard numerous accounts of employers needing workers but unable to find them. The problem is that the labor market is highly segmented, requiring very specialized skills. For instance, a worker that operates a computerized lathe to make helicopter parts is not easy to hire right off the street. Small manufacturing firms may be clamoring for workers who can operate lathes. All the while, there may be unemployed workers — maybe people who sold cars or office equipment before losing their jobs — who need jobs but cannot find one. In many cases, workers out of a job are located in hard-hit areas but refuse (or lack the funds) to move to where the jobs are. In other cases, people have skills that are outdated. Employers pick applicants with the most knowledge. Some of the long term unemployed are people with marginal skills. Those who cannot perform simple math; or read at only the 4th grade level; or have below average intelligence could easily find themselves without a job for the long haul.
The answer to your question is “yes.”
This might be my first time agreeing with Devon on something…
Unemployment is high because the economy is shifting, and what is now demanded wasn’t demanded 5 years ago, and the workforce isn’t prepared to fill the new jobs.
Perhaps this is a harmful effect of our failing education system, but I’m not sure it’s quite at the level of people not being able to do basic math or read above a 4th grade level.
There won’t be a recovery.
Right, Rob. Obviously every economic analysis on both sides isn’t taking into account the certainty of a falling sky, therefore making their analyses incorrect.