Unemployment looks normal for everyone except those out of work for six months or longer. If we don't act soon, the long-term unemployed will become unemployable.
There's a new cliff in town, and it's much scarier than the fiscal cliff. It doesn't have anything to do with expiring tax cuts or sequesters. It has to do with people who have been out of work for six months or longer. It's the worst cliff of them all: the Unemployment Cliff.
Our unemployment crisis is also an unemployment enigma. When jobs openings go up, unemployment should go down. This relationship is captured by the Beveridge Curve, seen below. The diagonal red line says that when there are more vacant job openings, the unemployment rate should be lower. But as you can see in the bottom right hand corner, something strange (and very bad!) is happening. More job openings haven't produced more jobs. That suggests a mismatch between jobs and skills ... the dreaded "structural unemployment."
Look again. This might be the most important chart you'll see. If unemployment really is structural, there's not much more policymakers can do to bring it down. If it's not, policymakers should be tearing their hair out to put people back to work. So, is it? No. A pioneering paper out of the Boston Fed pretty definitively shows that we have a long-term unemployment problem, not a structural unemployment problem.
There's always a story when it comes to structural unemployment, and it's almost always a story about old workers needing new skills for our brave, new economic world. The Boston Fed paper, by Rand Ghayad, a Ph.D. candidate in economics at Northeastern and Visting Fellow at the Federal Reserve Bank of Boston, and William Dickens, a professor of economics at Northeastern and visiting scholar at the Federal Reserve Bank of Boston, looks at the Beveridge curves for different ages, industries and education levels to figure out exactly who is getting left behind nowadays. The answer is ... everybody. The Beveridge curves for young and old, blue-collar and white-collar, and high school and college graduates all look alike -- there's the same upward tick in all of them. There's a word for this, and that word is flabbergasting. As Ghayad and Dickens point out, the last time we had a structural unemployment problem was during the deindustrialization of the 1970s and 1980s, when Beveridge curves for blue-collar workers, and only blue-collar workers, moved up. Did we all wake up in 2008 and suddenly lose our skills?
Not exactly. Ghayad and Dickens broke down Beveridge curves along one more axis -- length of unemployment. Here's what it looks like for people who have been out of work for less than six months. This is what normal looks like.
This chart is worth approximately 20 words. People out of work for less than six months haven't had a harder time finding work than they usually do. But the Beveridge curve has shifted up for all workers, so that implies all of the shift must have come from people out of work for six months or more. The chart below shows us that this is indeed the unhappy case. Unemployment is a cliff that's hard to climb out of after six months.
It's hard to imagine a big skills or incentives gap between people unemployed for five months and people unemployed for six months. But it's not hard to imagine companies treating their resumes differently. Overrun HR departments might just toss the resumes of applicants who have been out of work for six months or more, because they assume there must be something wrong with people who have been out of work that long. Sadly, this isn't a hypothetical. Scott Pelley reported on firms that won't consider the long-term unemployed -- or the unemployed, period -- for 60 Minutes earlier this year. It's depressingly legal to discriminate against the unemployed, and a depressing number of companies do just that.
Circles don't get more vicious than this. The people who need work the most can't even get an interview, let alone a job. It's a cycle that could end with the long-term unemployed becoming unemployable. It's what economists call hysteresis, the idea being that a slump, left untreated, can make us permanently poorer by reducing our future ability to do and make things. You should be scared anytime you see the words "permanently" and "poorer" together in a sentence -- especially if you're a policymaker. We need more stimulus, and we need it now. That means the Fed needs to figure out its thresholds for forward guidance and Congress needs to not only undo the fiscal cliff, but also, please, give us some more infrastructure spending. Heck, Larry Summers and Brad DeLong think fiscal stimulus might even pay for itself with interest rates so low by preventing hysteresis from happening.
We can do better, if we want to. As Paul Krugman points out, people told themselves structural unemployment was to blame during the Great Depression too, only to discover that all the people who supposedly didn't have the right skills suddenly did once the military buildup started. Funny how adequate demand works. The best thing we can do for long-term growth is to forget the long-term and get the long-term unemployed back to work now.
In the long run, we can't afford to worry about the long run.
The Onion had a problem: It fell behind the times. The mock newspaper hadn’t printed an issue on actual paper since 2013, and in the period since, it never redesigned its website. As the media world changed—as the New York Times and the Washington Post adapted the ways they published stories online—The Onion lost a key satirical weapon. Visually, it no longer looked like many of the publications it parodied. And so, like it had done many times before, The Onion tagged along.
Infomercials are fond of marketing strategies that rely on a theory of psychological pricing. You don't pay a flat fee for your Shake Weight or Magic Bullet or Ginsu Knife; you dish out three easy payments. And your payments aren't $40, of course; they're $39.99.
Most of us, for better but probably for worse, are familiar with the sneaky logic of infomercials. That doesn't mean, however, that we are immune to their charms. Nor are we immune to the pull—ironic, and also very much not—of the products that are sold to us in the late night and early morning, our most vulnerable hours, via charismatic pitchmen and sad-sack stand-ins for human frailty. Oxyclean. The PedEgg. The Pocket Hose. The Clapper. The Socket Dock. The food dehydrator. GLH. Which is, I mean, hair that you spray onto your scalp! Even the most savvy consumers among us can find ourselves ensnared by the bleary promise of life-improvement that can be ours, we are told, for only two easy payments of $19.95 (plus shipping and handling).
In 2004, two women who were long past college age settled into a dorm room at a large public university in the Midwest. Elizabeth Armstrong, a sociology professor at the University of Michigan, and Laura Hamilton, then a graduate assistant and now a sociology professor at the University of California at Merced, were there to examine the daily lives and attitudes of college students. Like two Jane Goodalls in the jungle of American young adulthood, they did their observing in the students’ natural habitat.
The researchers interviewed the 53 women on their floor every year for five years—from the time they were freshmen through their first year out of college.
Their findings about the students’ academic success later formed the basis for Paying for the Party, their recent book about how the college experience bolsters inequality. They found that the women’s “trajectories were shaped not only by income ... but also by how much debt they carried, how much financial assistance they could expect from their parents, their social networks, and their financial prospects.”
There are plenty of things to be gained from going abroad: new friends, new experiences, new stories.
But living in another country may come with a less noticeable benefit, too: Some scientists say it can also make you more creative.
Writers and thinkers have long felt the creative benefits of international travel. Ernest Hemingway, for example, drew inspiration for much of his work from his time in Spain and France. Aldous Huxley, the author of Brave New World, moved from the U.K. to the U.S. in his 40s to branch out into screenwriting. Mark Twain, who sailed around the coast of the Mediterranean in 1869, wrote in his travelogue Innocents Abroad that travel is “fatal to prejudice, bigotry, and narrow-mindedness.”
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
In 2008, I was elected governor of Delaware. In politics, timing is everything. You can be a fantastic candidate and run in a bad year for your party and get clobbered. You can be an absolute dud and run in the right year and get the brass ring. 2008 was a good year to be a Democrat.
But beyond the political benefit, my timing was awful. A month before I took office at the depths of the Great Recession, Chrysler closed its assembly plant in Newark, my hometown. A few months after my inauguration, General Motors shuttered its plant a few miles away. That fall, Valero closed its refinery. Those three employers had represented the best opportunities for high school graduates to get middle-class jobs for decades. Within a year, all were gone.
When The Last Man on Earth debuted in March to critical praise and surprisingly strong ratings, it felt like a notable anomaly on network television. In its spare opening episode, creator/star Will Forte's vision of the post-apocalypse Earth featured a white-trash Monsieur Hulot-type wreaking wanton property destruction in Tucson and pilfering antiquities from the Smithsonian in an effort to stave off the crushing emptiness of the world. When another character (played by Kristen Schaal) entered the scene, it initially felt like sweet relief—someone for Forte's shellshocked wanderer to play off of—but then more people started rolling in, and the show became something far more nightmarish: a vision of the dating life of a single, entitled, American thirtysomething.
Before Napoleon Bonaparte uttered his last words ("France, l'armée, tête d'armée, Joséphine") and perished on the windswept island of Saint Helena at the age of 51, he reportedly treated himself to a feast. The exiled French leader scarfed down liver and bacon chops, sauteed kidneys in sherry, shirred eggs with cream, and garlic toast with roast tomatoes.
Those wishing to revisit his last meal might have a hard time recreating it—Trader Joe's doesn't stock kidneys, last I checked—but they can enjoy the next best thing. The food-advertising director Gus Filgate is creating a series of short films that reproduce the last meals of noteworthy individuals.
The one for Napoleon seems to hint at the visceral, brutal nature of 19th-century French rule: Lard snaps in an iron skillet; kidneys drip with milk; a tomato's head is severed and its guts spew out.