Structural Unemployment and "Skills gap" - RIP

Michael Collins
"The last unemployment report said that for the first time in my lifetime, and I’m not young…we are coming out of a recession but job openings are going up twice as fast as new hires. And yet we can all cite cases that we know about where somebody opened a job and 400 people showed up. How could this be? Because people don’t have the job skills for the jobs that are open." President Bill Clinton, September 2010

Former president Clinton took the lead in selling the notion of "structural unemployment" - a gap between employer job requirements and inadequate skills on the part of workers. Clinton's sales skills are considerable. The thoroughly unsupported notion stuck in the minds of the corporate media and some business leaders.

A Deeper Look into Friday's Unemployment Numbers

The headlines hit the feeds, WOW! May nonfarm payrolls -345,000, while minimizing a 9.4% national unemployment rate.

Others, not really interested in lagging indicators of a possible recession bottom, questioned Huh?

I mean, really, talk about cheerleading!   A reduction in the collosal monthly rate of job losses over the last year or so is interpreted here as a slow-down in the recession?  How so?  A slow-down in job losses, perhaps, and probably a monthly blip, but an improving recession?    How is that connection established?   I'd say there's about as much substance to that statement as Bush's remark that "We don't torture".

In Jobless rate slows, unemployment up and traders are happy:

There are so many people that have run out their unemployment benefits and have either:

  • Just stopped looking and aren't working
  • They had to take part time work

In these economic times of a prolonged recession, oops better get my words in order her, call it an economic down turn.   Did the powers to be ever really say the R word.   Did we hit enough quarters for them?

Econbrowser (one of the best blogs out there for economics!) says it all with a couple of graphs:

Job Losses, Wages Worsened - No End in Sight

Loss of jobs and real wages worsened in May with no end in sight; an ominous sign for financially strapped households.


Today’s BLS jobs report revises down their previous estimate of the number of jobs in March and April (by a total of -15k) and shows another loss of -49k jobs in May. Indeed, local governments kept adding jobs in May while the number of private sector jobs fell by -66k.

Widespread local government budget shortfalls for the fiscal year ahead will soon eliminate this much-needed, tax-payer-dependent source of job growth. 

 Over the past 12 months, the private sector has added only 16k jobs despite the fact that bars and restaurants added 227k and private education and health services added another 577k jobs. That is, excluding bars, restaurants and private education and health care, the private sector in the US has lost roughly 800k jobs over the past year.

Updated Job Data Analysis - January 2001 to April 2008

Updated jobs analysis: from January 2001 to April 2008, only 3.8 million private-sector jobs -- all accounted for by private health care bureaucracies, bars and restaurants.

Manufacturing lost -3.5 million jobs; more than 1-in-5 Manufacturing jobs were lost in the last 7 ¼ yrs.

Over the period:

Textile Mills lost -57.2% of their jobs;

Apparel manufacturers lost -56.8% of their jobs;

Communications Equipment manufacturers lost -46.9% of their jobs;

The Word

You might be wondering just how the BLS computes the unemployment rate. Well, from Comedy Central, Stephen Colbert in the Audacity of Hopelessness explains it all.

So, everyone get that, if you give up hope the economy improves. I would say that has been the Bush administration's overall policy for the United States middle class.

Real Weekly Wages Plunges in January

Real weekly wages plunges in January, down -1.4% yr/yr adding more stress to deeply indebted households

The BLS reported today that average seasonally adjusted weekly wages fell another -0.5% behind consumer price increases in January with wages now able to buy -1.4% less than they did one year ago. Weekly wages fell in four of the past five months since last August. Average real weekly wages are now again lower than they were in January 2002…and in January 1981 when the irresponsible debt and deregulation ideology took power.

wages plunge, comparison of Jan. 07 to Jan 08

Hours Worked Declined Sharply and Wages Fell

Today's BLS report: total hours worked DECLINED sharply in Q4 and AVERAGE real wage/benefit compensation per hour FELL.

After years of denial and spin about the financial condition of US households/consumers, you might think the newswires and salesmen on cable would be buzzing with the key findings in today’s BLS report on US hours worked, real compensation, output and productivity. You would be wrong; the debt industry’s misleading confidence game prevails with the key findings either not mentioned at all or they are relegated to an afterthought as space permits.

The key finding in today’s report is that the total number of hours worked (and paid) in non-farm businesses during 2007-Q4 FELL at an annual rate of -1.5%. Indeed, THE TOTAL NUMBER OF HOURS WORKED IN Q4 WAS LESS THAN IN 2006-Q4. The report shows total non-farm jobs also falling at a -0.5% annualized rate in Q4 and rising by only 0.4% yr/yr.