As we've noted in class, half of the unemployment rate is composed of people out of work for long periods of time, which may reflect a change in the structural nature of the job market. This means these people may not be able to easily find other jobs, and we may be witnessing an increase in the normal rate of unemployment. Here are comments related to that question:
- Why the Job Market May Never be the Same: The Great Recession has profoundly altered the U.S. labor market, says a growing number of economists. The problem is that unemployed workers are not finding their way to available jobs as smoothly as in past recoveries due mainly to a mismatch between the skills companies need and those workers have to offer. If these analysts are right—and there is mounting evidence in their favor—the goal of returning to the heady days of 5 percent unemployment, generally perceived as “full employment,” may no longer be possible, and policymakers may not be able to do anything about it.
- Gary Becker doubts whether structural employment has changed. He thinks high joblessness is due to extended unemployment benefits, an unwillingness to work for less money than they had previously, and a reluctance to move to where the jobs are.
- Richard Posner isn't sure that structural change can be ruled out. Jobs continue to be sent overseas where labor is cheaper and workers have fewer protections. and there's this: Persistent unemployment can feed on itself, because the unemployed have lower incomes and so spend less on consumption (and consumption drives production and therefore employment), and because the long-term unemployed lose skills. And if the pattern of employment shifts, many workers discover that they have not been trained for the types of work in which there are jobs.
