James Surowiecki rejects the notion that the current unemployment rate is somehow “structural” and unchangeable. While I think there are minor structural elements to the jobs crisis, it’s far more clear that the structural unemployment myth serves the ends of those who don’t want to react to fix the problem.
If the problems with the job market really were structural, you’d expect job losses to be heavily concentrated in a few industries, the ones that are disappearing as a result of the bursting of the bubble. And if there were industries that were having trouble finding enough qualified workers, you’d expect them to have lots of job vacancies, and to be paying their existing workers more and working them longer hours.
As it happens, you don’t see any of those things. Instead, jobs have been lost and hiring is slow almost across the board. Payrolls were slashed by five per cent or more not just in the bubble categories of construction and finance but also in manufacturing, retail, wholesale, transportation, and information technology. And take hiring: one of the industries that have been most cautious is the hotel and leisure business. Needless to say, there’s no shortage of people with the skills to be maids or waiters; there just isn’t enough work. Another sure sign of weak demand is that people with jobs aren’t deluged with overtime; hours worked have barely budged in the past year.
The usual suspects always make the structural argument because they just don’t believe in fiscal policy and the normal means of stimulating investment and consumption. And I think it’s important to understand the fate to which that consigns 15 million unemployed Americans.
The unemployed are far more likely to go without health insurance, especially now that the COBRA subsidy has lapsed, making it harder for unemployed workers to maintain their old employer-based health coverage. Being uninsured puts people at far greater risk for unnecessary deaths. The unemployed have less money to spend on basic necessities. A new paper from the National Bureau of Economic Research shows that unemployed workers frequently cut back on healthy foods like fruits and vegetables, leading to poorer diets and, eventually, bigger health problems. Recent studies show a linkage between unemployment and suicide; during this past recession, calls to suicide hotlines have jumped along with the unemployment rate.
Not everything pulls in this direction; recessions correlate with fewer car accidents, presumably because there are less cars on the road at peak drive-time hours; and higher wages can result in greater consumption of cigarettes, which makes sense, as cigarettes have become taxed so heavily that they practically have become a luxury good. But in a general sense, the impoverished lifestyle is a more dangerous lifestyle. They call it the safety net for a reason, because with unemployment comes far less safety.
So the folks claiming that unemployment is structural and we just have to wait for the business cycle to turn around are essentially allowing millions of people to get sicker, more suicidal and in general more at risk. That’s inexcusable when something can be done to ameliorate the situation. Yet that’s where we are.
UPDATE: Bob Herbert always has good thoughts related to this issue, and he does again today.