Is high unemployment here to stay?
TEXT OF STORY
STEVE CHIOTAKIS: A look at chronic unemployment in this country just a day before the big government jobs report is released for August. Some economists are predicting an increase in unemployment from the month before. So the question is, could high unemployment be here for the long haul?
Here’s Marketplace’s Mitchell Hartman.
MITCHELL HARTMAN: Economists talk about the “structural” rate of unemployment. Think of it as the economy’s sweet spot — if you want a job, it doesn’t take too long to find one. If you’re hiring, you can get the skilled workers you need. This is where we were before the Great Recession. Monthly unemployment was just about 5 percent — enough churn in the labor market to keep things humming along.
Now, unemployment’s double that. Ken Matheny is with Macroeconomic Advisers.
KEN MATHENY: And it’s going to be many years at least until we see unemployment back to kind of typical 5 percent range.
Could we ever go that low again? Economists at the IMF think not — that “structural” unemployment may now be more like 6-7 percent. The argument is our economy has become less able to provide jobs where they’re needed.
MATHENY: Labor markets aren’t functioning as well as we’d like. People seem to be kind of frozen in place, have a difficult time buying and selling houses to support better matching of location with where new jobs might be created.
The housing market should eventually thaw, letting people move around again. But what about other labor-market problems — like employers unable to find enough skilled workers for new technology jobs. Couldn’t that push unemployment permanently higher?
Dean Baker of the Center for Economic and Policy Research doesn’t think so.
DEAN BAKER: There’s no real good reason to think that our economy has fundamentally changed with this mismatch of skills and jobs. The reality is the economy does not change that quickly.
Baker says what’s holding employment back isn’t some structural shift in the economy, but simply a lousy economy, where no one’s feeling confident enough to hire again.
I’m Mitchell Hartman for Marketplace.
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