We have some excellent economists on FDL and while my economics training before and during my training as an actuary was extensive I prefer to quote folks like them rather than pontificate as if I really have a deep understanding of economics. In that spirit I present Heidi Shierholz, an economist at the Economic Policy Institute, who has noted the Obama lie – you ask which Obama lie of course – this one is the one in the State of the Union speech where he claims education is the solution to unemployment, saying that he hears from many business leaders who “want to hire in the United States but can’t find workers with the right skills.” The White House has also said the inability to sell homes has decreased worker mobility causing the high unemployment, which overstates the effect of the housing crisis on unemployment – as they refuse to accept the need for the opposite of austerity at this time. As we ponder the recent drop in the official U-3 unemployment rate, knowing that U-3 “Unemployment” counts only those that have been in the job market for the past 30 days and ignores those discouraged workers who have given up, and knowing that the last four years of new entrants to the job market have not increased the number employed (we are just about back to where the number employed is about where it was when Bush was leaving office – on the BLS Household survey 143 million working in 12/08 is 142 million in 1/12, and in the establishment survey 134 million in 12/08 is now 132 million, as the could work population in the Household survey grew from 235 million in 12/08 to 242 million in 01/12 ), I give you a paraphrased summary of Heidi’s observations:
As to mobility of the population solving high unemployment with folks moving from 13.5% UE in 2011 in Nevada to the 3.5% UE North Dakota once we get rid of the “housing lock”, the areas with low UE employ few workers with the 538 best counties out of over 3,000 counties accounting for just 5.8 percent of the country’s jobs. “For these counties to absorb the extra unemployed workers from the other counties to get their unemployment rates down to their per-recession levels, the number of jobs in the “receiving” counties would have to grow by 85 percent. By comparison, over the last year, employment in these potential “receiving” countries grew by just 1.1 percent. The failure to relocate cannot be a key part of high unemployment unless there are places where a significant portion of unemployed workers could go and be readily absorbed, which, as this analysis shows, there are not.”
As to skills and education as the solution, while there are always changes taking place in any labor market that will create a degree of mismatch between the workers skills and education that employers need and that available from the workers who are available, “the relevant question given the current crisis in the labor market is whether this mismatch is a key part of today’s unemployment. And the answer a resounding no. The unemployed currently far outnumber job openings; even if every job opening were filled immediately, there would still be more than 10 million unemployed workers in this country. Further, if employers’ inability to find suitable workers were a significant part of today’s unemployment problem, you would expect to find labor shortages in some sectors. But there are no major sectors where that is happening—unemployed workers dramatically outnumber job openings across the board http://stateofworkingamerica.org/charts/unemployed-and-job-openings-by-industry/ .”
So while job training programs can help, it will not solve the UE problem – we need more demand for workers which comes from boosting demand for goods and services in the economy. “It is not the right workers we are lacking, it is work.” There has been a large increase in unemployment across all occupation categories, and the skills of laid-off construction workers appear to be at least as well-matched to the available jobs as laid-off workers in other occupations – http://www.usnews.com/opinion/blogs/economic-intelligence/2012/02/22/high-unemployment-not-primarily-driven-by-lost-construction-jobs – show that today’s unemployment is not being driven by a “skills” mismatch).
Obama sells Unemployment in the Great Recession as a structural problem, but it is a demand problem, and Obama’s chasing deficit reduction and “long term education” is the wrong approach.
But then deficit reduction, and lower taxes on the rich and corporate as in Obama’s push for a 28% corporate rate from the current 35%, is the GOP approach and Obama is nothing if he is not the GOP candidate from a different party.