God help you if you’re out of work longer than 6 months
by digby
Your depressing story of the day:
There are two labor markets nowadays. There’s the market for people who have been out of work for less than six months, and the market for people who have been out of work longer. The former is working pretty normally, and the latter is horribly dysfunctional. That was the conclusion of recent research I highlighted a few months ago by Rand Ghayad, a visiting scholar at the Boston Fed, and William Dickens, a professor of economics at Northeastern University, that looked at Beveridge curves for different ages, industries, and education levels to see who the recovery is leaving behind.
Okay, so what is a Beveridge curve? Well, it just shows the relationship between job openings and unemployment. There should be a pretty stable relationship between the two, assuming the labor market isn’t broken. The more openings there are, the less unemployment there should be. If that isn’t true, if the Beveridge curve “shifts up” as more openings don’t translate into less unemployment, then it might be a sign of “structural” unemployment. That is, the unemployed just might not have the right skills. Now, what Ghayad and Dickens found is that the Beveridge curves look normal across all ages, industries, and education levels, as long as you haven’t been out of work for more than six months. But the curves shift up for everybody if you’ve been unemployed longer than six months. In other words, it doesn’t matter whether you’re young or old, a blue-collar or white-collar worker, or a high school or college grad; all that matters is how long you’ve been out of work.
I don’t know if the government can fix this problem, but I’m thinking that it could least try talking about this and explaining that people are discriminating when they do it. I suspect that this has taken hold for many in the business world as some sort of proxy for the “lazy-moochers-takers-who want-something-for-nothings” that the right wingers see as the unemployed. They figure that if someone’s been unemployed for longer than a few months it must be because they love living on all those luxurious bennies they are getting for free. Otherwise, they’d have found a job, right?
But that can’t be true for everyone. There must be some decent people who just haven’t thought this through and are using it as a quick filter without considering the real life consequences. I’d imagine that anyone with an open job gets a lot of resumes and has to figure out ways to weed them. This may just be something that’s entered the conventional wisdom and nobody’s questioned it. Someone needs to wake them up.
And, if we lived in a rational world where the government did it’s job for the people instead of serving the wealthy, it would do this:
It’s time for the government to start hiring the long-term unemployed. Or, at the least, start giving employers tax incentives to hire the long-term unemployed. The worst possible outcome for all of us is if the long-term unemployed become unemployable. That would permanently reduce our productive capacity.
They are obsessed with possible projected deficits 20 years from now. This, not so much. I wonder why?
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