Friday, June 10, 2011

Unemployment in the national news

In the last couple of weeks I noted a flurry of news stories about unemployment, perhaps due to the slight uptick in the national unemployment rate in May.

But what precedes unemployment? Sometimes it's a layoff. In state and local governments across the U.S., layoffs are on the rise and projected to increase, according to a CNN Money article. This news is not a surprise. Employment rose in many government sectors during the recession in response to increased demand for services such as food stamps and unemployment insurance. The high demand is starting to abate and tax revenues have declined, so governments are looking to cut back. Of course, the job losses will be hard on the economy, as with any employment decline.

So what happens to people after losing a job? Some of them end up back at home with their parents. The Charlotte Observer keenly points out that the growth in the number of people who move in with their parents after leaving the nest "has been building for years, part of a culture shift in which children are waiting longer to leave the nest, but it's intensified since the downturn cast thousands out of work or into part-time jobs with little pay." How many go home? How do they feel about it? How do their parents feel about it? Check out the full article.

How long does it take an unemployed person to find a job? As my favorite economics professor in college always said: It depends. In this case, the length of unemployment is affected by factors such as work experience and geography. In this economy, an unemployed carpenter will probably have more difficulty finding a job than an unemployed medical assistant. Either way, job seekers only have so much patience. In 2010 the average unemployed person gave up looking for a job after about 20 weeks (5 months), as reported by the Wall Street Journal. The long-term unemployed face an increasingly uphill battle with an adverse effect on the economy. (See the full article for more details.)

The Wall Street Journal also reported last week that among those currently unemployed, one in three have been jobless for a year or more. Here in the Research Section, we track the average duration of unemployment in Oregon. Sadly, our long-term unemployment figures mirrors national trends. In April (the most current data available for states), 31 percent of the unemployed had gone without work for at least one year:

The final article I noticed about unemployment is on a topic that ignites debate among labor economists: the "normal" or "natural" unemployment rate. (Not sure what that means? Here's the quick explanation: Even in the very best of economic times, some companies still lay off workers and some workers still voluntarily leave jobs, thus there always exists some amount of unemployment in the labor force. This leads many labor economists to speculate about what level of unemployment is "natural" for the economy. They ponder and debate the question, "If the economy is healthy and growing at a healthy pace, what is the level of unemployment?")

An article this week from McClatchy News addresses the question and makes an argument that the "normal" unemployment rate is currently much higher than it was 10 years ago. The article discusses the current skill mismatch in the economy and the effects on the unemployment rate. I won't give my opinion on the topic, except to say that the article is an interesting read.

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