Friday, September 17, 2010
What will normal be?
I often write about this present mess being the “new normal.”
The admin’s latest whiz kid, that Goolsbee fellow, says unemployment will stay high
for years. Then he disappeared—has anyone seen him lately? Weird. Hmmm.
Anyhow, Jon Hilsenrath recently wrote about this in the WSJ, Sept 4, 2010.
He asks if more “stimulus” doesn’t cause jobs to jump into being, could it be because the structure of the economy has changed? (It also doesn't help that most of the so-called stimulus was to pay state workers the diminished tax base could not pay.)
One aspect is the interconnectedness—people can’t move to take jobs because they can’t move, period, they can’t sell houses that other people can’t move to buy from them.
Companies can’t find appropriate workers. Workers can’t find appropriate jobs.
The Federal Reserve can’t fix this.
One idea is lower unemployment payments, but there as long as you need them, without this continued need for renewal.
Usually, when there are a lot of unemployed people, firms can fill positions quickly. Not now and not for the last 18 mos.
Maybe it’s because the big hirers of the past—construction, finance—are now the down and out group.
Workers can't easily shift from framing to drawing blood, for example.
They can’t move geographically to where there is work.
Remember when we worried about being a service economy rather than a manufacturing one? Oh, those were good times.