Monday, January 31, 2011

Unemployment Crisis High Through At Least 2011

Joan McCarter - Minus concnerted stimulus action from the government, which ain't happening with a GOP House, we're looking at grim economic times for at least half a decade, according to the CBO.

The jobs crisis isn't going anywhere, according to the latest forecast from the nonpartisan Congressional Budget Office, which puts the national unemployment rate above 9 percent through 2011 and 8 percent through 2012.

Unemployment will fall to a more "natural rate" only in 2016, when CBO estimates it will reach 5.3 percent -- a projection roughly in line with private-sector figures.

"The recovery in employment has been slowed not only by the moderate growth in output in the past year and a half but also by structural changes in the labor market, such as a mismatch between the requirements of available jobs and the skills of job seekers, that have hindered the reemployment of workers who have lost their job," CBO's report says.

The degree to which the unemployment crisis is structural, as opposed to cyclical, is hotly debated by economists, with progressives like Paul Krugman arguing that structural unemployment is a fake problem "which mainly serves as an excuse for not pursuing real solutions." Many argue that the even drop in employment across industries shows that lack of overall demand is the problem, with stimulus spending the answer. Others have said pay disparities between workers with different levels of education show the problem is at least partly structural.

So much for those great, stimulative tax cuts. While the debate over whether or not this is a structural or situational problem continues, the reality for the unemployed remains unchanged:

The most unusual factor of the jobs crisis is how long some people are going without work. Long-term unemployment has surged since the unprecedented mortgage meltdown that clobbered housing prices and launched the Great Recession in December 2007. Some 6.4 million people -- 44.3 percent of the 14.5 million unemployed -- have been out of work for six months or longer, and 1.4 million have been out of work for two years or longer. This is the worst long-term unemployment situation in the United States since the Great Depression.

Even if you want to call that structural, seems like someone with the power to do so would want to do something about that. Or at least, make a convincing effort towards trying to do something about it, if for no other reason than to make the other guys look bad. Honesty, and a real acknowledgment from the administration that many people are suffering is appreciated, but a jobs progam (even if the GOP killed it) would be better.

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