Um…You Think Maybe We Might Just Kinda Need a Jobs Plan?

August 31st, 2011 at 1:06 am

The figure shows the average weeks of an unemployment spell from 1948 through last month.  There’s an upward drift over the full series due in part to the aging of the workforce—older people take longer to get jobs.

But that’s not what’s going on now.  What’s going on now is an unprecedented mismatch in the number of people who need work and the number of available job slots.  And any policy maker who could do something about that high supply/low demand imbalance but choices not to, or who argues the spike in long-term unemployment can be fixed with budget cuts, or by shutting down the EPA…he or she should get out of the way and let someone else take over.

The average weeks of an unemployment spell just topped 40 for the first time on record–the average over the whole series is about 14 weeks.  One look at the magnitude of the joblessness problem we face suggests that working families simply do not have the luxury of political or ideological posturing by policy makers who would block a serious jobs plan.

 

Source: BLS

Update: A commenter makes an excellent point that I forgot about.  The average duration graph is biased up in terms of historical comparisons because in 2011 the BLS increased the number of years of unemployment that you were allowed to report on the underlying survey that collects these data from up to 2 years to up to 5 years.  Absent the change–i.e., under the old topcode regime of up to 2 year jobless spells–you’d shave 2-3 weeks off the 2011 values in the graph.  This does not change the substance of my argument, however.  In fact, the median duration of unemployment spells was unaffected by the topcode change, and here is that picture, which is just as historically unprecedented and equally discomforting.

 

BLS Median Length of Unemployment Spells, 1967-2011

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7 comments in reply to "Um…You Think Maybe We Might Just Kinda Need a Jobs Plan?"

  1. MBuettner says:

    This graph is a little misleading. BLS made a change to the data series at the beginning of this year:

    “Effective with data for January 2011, the Current Population Survey (CPS) was modified to allow respondents to report longer durations of unemployment. Prior to that time, the CPS accepted unemployment durations of up to 2 years; any response of unemployment duration greater than this was entered as 2 years. Starting with data for January 2011, respondents were able to report unemployment durations of up to 5 years.” (http://www.bls.gov/cps/duration.htm)

    That said, this average had never gone higher than 22 weeks until May 2009, which of course was before the data change.


  2. Cat says:

    Given that the current average is so far outside of the series average and that it looks like it hasn’t peaked yet leads me to feelings of despair.

    I feel like the politicians and the media spent the last 2 years bickering like maladjusted children over who gets to hold the remote while someone was stealing the TV and in some politicians cases helping the thief steal the TV as long as they get to hold the remote in the end.

    I feel there are very few politicians who are willing to risk their position in order to fix our situation.


  3. Carol says:

    Economists talk about structural unemployment, which happens when workers are unprepared for the kind of jobs available and cyclical unemployment, which ebbs and flows with the business cycle – at least that’s my layman’s understanding of the terms.

    My question for you is: aren’t we experiencing a difference kind of unemployment today – one that is caused by jobs leaving the country so that there is a permanent dearth of (good)jobs compared to the number of job seekers.


  4. Chigliakus says:

    Jared, a nitpick:

    From http://www.bls.gov/cps/duration.htm

    “Effective with data for January 2011, the Current Population Survey (CPS) was modified to allow respondents to report longer durations of unemployment. Prior to that time, the CPS accepted unemployment durations of up to 2 years; any response of unemployment duration greater than this was entered as 2 years. Starting with data for January 2011, respondents were able to report unemployment durations of up to 5 years. This change affected estimates of average (mean) duration of unemployment.”

    Judging from http://www.bls.gov/cps/avgdur.seas.2011.06.pdf the 2-year topcode was 37 and the 5-year topcode was 39.9 so you’re not doing apples-to-apples comparison in your graph. (Although things still look terrible with the 2-year number).

    Also, where do you get at the raw data that you used to generate your graph, is there a public link or do you have to be an insider? Thanks!


  5. Geoff Freedman says:

    There is simply a lack of jobs, period. Demand is so weak because so many folks are underwater financially and no one is buying. They are broke, so all the medicre service jobs have disappeared.

    I guarantee that no amount of of generic stimulus or generic tax breaks will work because they don’t address the underlying structural issues, including debt restructure.

    1. A work force not prepared for the 21st Century either educationally or technically.

    2. Trade agreements that drive jobs and money out of the country never to return.

    3.Consumers with no money, with an average ratio of debt to assets of 118% with virtually no hope of recouping lost values on housing assets.

    4.Lack of incentives for corporations to develop jobs in this country, especialy considering demand is light, and rules that allow companies to to organize fairly easily under foriegn flags to avoid significantly higher U.S. corporate tax rates (i.e. – Zurich Switzerland – tax rate 15%).

    5.Infrastucture that is starting to fall apart.

    6.A bloated and unafforadable military-industrial complex.

    7.Inefficient energy systems.

    8.Too big to fail banks loaded with debt both on and off the books that should really be written off (easing of mark to market accounting rules).


  6. urban legend says:

    We hung on by our fingernails to a barely acceptable level of employment (and a misleadingly low rate of unemployment) by letting one sector, real estate, explode into an artificial bubble. In other words, we needed to prop up one sector just to run in place — and we weren’t even completely able to do that, as evidenced by a lower employment-to-population ratio in early 2008 at its Bush-era height compared to 2000, and consumer confidence levels that never came close to matching those at the end of the Clinton presidency. Now that sector is gone for a generation, and manufacturing was allowed to be virtually destroyed. So what will take their place? Well, there is a sector that should have employed millions over the last 30 years that we neglected with anti-tax fervor and depressed earnings (and taxes) for everyone but the wealthiest. If we had not neglected it, and just kept up with the level of modernizing other advanced countries are pursuing, we would not have needed the real estate bubble.

    It’s the national infrastructure, of course. Yes, we need emergency action in aid for states, help for the long-term unemployed, and direct hiring of the long-term unemployed in whatever jobs we can find. We also should do what we can to revive manufacturing, but that’s going to be a very long process. But short-term, emergency actions (including temporary tax breaks like payroll tax holidays) will not break through the national gloom that comes from the fact that under current rules our economy does not seem to be able to put everyone who wants a job to work. We must convince Americans our government understands that only the exercise of a collective will can change those rules to assure everyone has something to do and a reasonable income from doing it. The government must demonstrate it is committed to a long-term solution by pursuing massive, long-term employment in the sector that we have neglected for a long time, that can make a better and more livable country, that will be more difficult to outsource, that will employ many of those (at good wages) who were sucked into working in the real estate sector, and that we should have been working in the first place.


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