At 9.8%, unemployment is still a serious problem in the U.S. So serious, that some economists believe that the problem is structural -- not cyclical. That would essentially means that there has been a paradigm shift in certain industries, and the jobs that existed there before the recession are gone forever. That contrasts with merely cyclical unemployment, which is when firms lay people off during a recession, only to rehire them when the economy improves. In a New Yorker column this week, James Surowiecki argues that the problem is cyclical, and that economists who say that it's structural are misguided. In reality, both camps are sort of right.
Here's what Surowiecki argues:
The structural argument sounds plausible: it fits our sense that there's a price to be paid for the excesses of the past decade; that the U.S. economy was profoundly out of whack before the recession hit; and that we need major changes in the kind of work people do. But there's surprisingly little evidence for it. If the problems with the job market really were structural, you'd expect job losses to be heavily concentrated in a few industries, the ones that are disappearing as a result of the bursting of the bubble. And if there were industries that were having trouble finding enough qualified workers, you'd expect them to have lots of job vacancies, and to be paying their existing workers more and working them longer hours.
Now that private sector jobs have been growing for about a year, we have more data to begin to test the plausibility of the claim that some sectors' jobs may be gone for good. So let's go to the data.