Friday, February 15, 2013

The Scorpion

That’s the name being given to the idea behind the shape in this chart (copied and pasted below):*

13-02-07,11 Bloomberg Businessweek Graphic of the Scrorpion

This is a trendy meme on the internet this winter (universities don’t usually issue press releases for individual researchers).

Anyway, it touches on a few points we’ve already discussed this semester.†

When we looked at the JOLTS data a few weeks back, I pointed out that job openings (among other things) have returned to typical rates from their lows during the Great Recession. That’s the vertical axis here.

And, there are a few posts (like this one) on this blog discussing long-term unemployment (the horizontal axis here): it is unusual that it hasn’t fallen as in other recessions. Note that the chart above goes back to November 2001 (the month of the penultimate trough), so if we’re over 3 years into an expansion we should be back in that region. Clearly, we’re not.

The source article for “the scorpion” argues that this behavior is:

“…driven by something other than a mismatch between workers’ skills and the demands of available jobs.”

Another possibility is that the long-term unemployed in this recession may be searching less intensively—either because jobs are much harder to find or because of the availability of unprecedented amounts and durations of unemployment benefits. This seems to be a more likely explanation, although if a drop in search intensity is due only to the difficulty of finding jobs, it again raises the question why we would not see that phenomenon at shorter durations as well. 

These tend to suggest that it is something other than the jobs, skills and effort that are the problem. I’m always a little leery of saying this, because it’s hard to get data on this, but the more solid explanations that get dismissed, the more likely it is that more subjective explanations — like bad attitudes, drug problems, and other individual inadequacies — are the problem.

* This came from a piece entitled “The U.S. Long-Term Unemployment Crisis Stumps Economists” that appeared in the February 11-17 issue of Bloomberg Businessweek.

† Remember that post from earlier in the semester about the difference between a teacher and a professor Winking smile

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