January 4, 2012

January 4, 2013 (Jobs Byte)

January 1 was the anniversary of Haiti’s independence, and another marker – the third year since the earthquake – is coming up at the end of next week. Media outlets are examining what has been achieved - and what hasn’t - over the past three years. The N

Dean Baker
Room for Debate (The New York Times), January 2, 2013

If George Will's New Year's resolution was to get as many wrong assertions in his columns as possible, he is off to a good start. Today's piece presented readers with an avalanche of inaccuracies before pounding readers with the main point: George Will says we can't afford Social Security and Medicare. 

First let's take some choice items from the avalanche. Will tells us that America:

"has an energy surplus, the government-produced overhang of housing inventory is shrinking and the average age of Americans’ cars is an astonishing 10.8 years."

On the first point, we are exporting some oil based products and natural gas, but that does not offset the 10 million plus barrels of oil a day that we import. The government didn't produce the excess housing. Those were private companies that built the homes. The worst of the bubble financing came from folks like Ameriquest and Countrywide who issued junk mortgages because they were profitable. They then sold them to investment banks like Goldman Sachs and Citigroup who securitized them because it was profitable. Government regulators, first and foremost Alan Greenspan, deserve blame for not cracking down on the bubble, but it is more than a bit loose with reality to say the government "produced" the overhang.

As far as the average age of American cars, it is not clear whether we are supposed to think this is good or bad. (I hope my car will last at least 10.8 years.) 

But let's get to the fun stuff. Will tells us:

"Once, Japan bestrode the world, jauntily buying Rockefeller Center and Pebble Beach. Now Japanese buy more adult diapers than those for infants."

Yes, Japan has the longest life expectancy of any country in the world. If they adopted a health care system like the one in the United States perhaps the Japanese would die younger so that they would then buy relatively more diapers for infants. The Japanese may not opt to follow Will's recommendation here.

En Español While Congress struggled to approve legislation to avert the much-hyped “fiscal cliff”, a bill addressing “Iran’s growing hostile presence and activity in the Western Hemisphere” quietly and smoothly swept through both houses before the end of

Dean Baker
CNN, January 2, 2013

Dean Baker
New Left Project, January 2, 2013

Dean Baker
The Guardian Unlimited, January 1, 2013

There is a whole industry of economists and policy types who are incredibly anxious to find evidence of structural unemployment. The reason is that structural unemployment implies a mismatch between the available jobs and the skills of the unemployed.

This is important because if our unemployment problem is structural then simply using macroeconomic policy to generate more demand won't be of much help. If we want to get people back to work we have to get them the right skills or in the right place (there can be a locational mismatch as well) for the jobs that are available. That is a very difficult and much more complicated process than just spending money.

Recently some proponents of the structural unemployment view of the economy have been highlighting an outward shift in the Beveridge Curve. The Beveridge Curve relates unemployment to the vacancy rate (the number of job openings divided by the number of jobs). In general, higher rates of unemployment are associated with lower vacancy rates. However, in the last couple of years, there has been some increase in the vacancy rate without as large a drop in unemployment as would ordinarily be expected. This is taken as evidence that employers are having difficulty finding workers with the necessary skills in spite of the large number of unemployed workers. This is the story of structural unemployment.

A new paper from the Boston Fed by Rand Ghayad and William Dickens looks at this shift in the Beveridge Curve more closely. It finds a very interesting story. If we look at the long-term unemployed (people who have been out of work for more than 26 weeks) we see this shift clearly.