But the national figure hides a sharp divergence between rust-belt manufacturing states in the north and east, where unemployment is high but new job losses have fallen, and Sunbelt states in the south and west, where the labour market remains in flux.
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This pattern provides a clue to a vital policy debate: does high unemployment just reflect weak demand, in which case the Federal Reserve might be able to do something about it by launching a new round of asset purchases? Or is it a structural problem, showing that workers are in the wrong place or have the wrong skills, in which case monetary policy can do little?
.....Eric Rosengren, the president of the Boston Fed, noted that across the country job losses have been spread across a range of different industries.
“If all the loss was in construction then that’s a structural change, but that’s not the pattern we’ve seen,” he said in an interview with the Financial Times. Mr Rosengren’s colleague, Narayana Kocherlakota, Minneapolis Fed president, has made the reverse argument in speeches.
“Firms have jobs but can’t find appropriate workers. The workers want to work but can’t find appropriate jobs,” he said.
Mr Kocherlakota pointed out that the number of job openings has recovered but unemployment has not fallen in proportion. That implied something was preventing people from taking the available jobs. Mr Kocherlakota estimated that up to 2.5 percentage points of today’s unemployment was the result of the mismatch between jobs and workers.
In the rust-belt states much of the surge in unemployment was caused by the woes of the car industry. That rush of job losses has ended but it almost certainly left behind some workers whose location and skills meant they would struggle to find jobs, even if there were strong demand for labour. That was probably true before the recession as well, however: Michigan had a 7 per cent unemployment rate during the boom of 2006-07.
An argument for geographic mismatch is North and South Dakota. There unemployment is below 5 per cent, yet the states are not so distant from Michigan, at 13 per cent. As Lawrence Mishel of the Economic Policy Institute pointed out, however, these states are small and their workforce would have to expand vastly to absorb the unemployed from a state such as Michigan
Here is a link to the Boston Fed's study.
Here is a link to the Minneapolis Fed's study.
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Quoting:
Mr Kocherlakota pointed out that the number of job openings has recovered but unemployment has not fallen in proportion. That implied something was preventing people from taking the available jobs. Mr Kocherlakota estimated that up to 2.5 percentage points of today’s unemployment was the result of the mismatch between jobs and workers.
It's almost like many of these people bought houses but then housing prices collapsed and they found themselves unable to sell and move to where the jobs are.
Mr Kocherlakota pointed out that the number of job openings has recovered but unemployment has not fallen in proportion. That implied something was preventing people from taking the available jobs.
At my company, in a major metro area where qualified candidates are many, my company is still taking months to fill positions. It's got three causes:
1) we have been so shortstaffed for so long that HR and hiring managers are so busy, they are taking a long time to review resumes and move them to the next step in the hiring process;
2) hiring managers, more than I have ever seen, are still hung up on finding the "perfect" candidate and are unwilling to hire someone with 70-90% of the desired skillset, which extends by months the time-to-fill; and
3) the company still thinks we are in the depths of recession and they can lowball salaries, so a fair number of offers are being declined.
As you can imagine, we are losing candidates because our hiring process drags out too long and they accept other offers. We are losing candidates because we are not offering competitive salaries and they take other offers instead. And we are having trouble filling positions because hiring managers are unwilling to do even the smallest bit of training, and would rather wait 5 months for Mr. or Mrs. Perfect than take the 90% candidate and teach them something.
Which leaves the rest of us working overtime and getting more and more annoyed (and having gone too many years without raises). Now that hiring is bouncing back, all of the above is compounded by the fact that not only are we trying to hire for needed growth, we are trying to hire for backfilling positions people are quitting as they find better paying jobs.
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