Reply #49: The bleak truth about unemployment

[Demeter]

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/07/AR2010090706644.html

Somewhere between the rantings of the Republican right, which is peddling the nonsense that excessive government spending is to blame for high unemployment, and the Democratic left, which clings to the false hope that another helping of fiscal stimulus is all that is needed to get millions of Americans permanently back to work, is this stubborn reality:

The loss of 8 million jobs reflects problems that are largely structural, not cyclical, which means they won't be brought back by fiddling with a magic dial in Washington that controls how much the government spends.

When I say that the problems are structural, I mean something more than what labor economists refer to when they talk about the mismatch between the skills of the people who of are out of work and the skills needed for the jobs that are being created - although that certainly seems to be a factor.

Since 2007, the manufacturing and construction sectors have each lost 2 million jobs, with finance, hospitality and retailing accounting for 2 million more. Those categories alone account for three-quarters of the nation's job losses, and while a fraction of those jobs might return as the economy recovers, it will be a long time before automakers or home builders or investment banks or retailers see the sales numbers they had at the height of the biggest credit bubble the world has ever seen. Some of those laid-off workers may have been in this country illegally and have now returned home, but most will be looking not only for new jobs but also new careers....MORE