I painted a fairly bleak picture of structural unemployment in my previous post. First, let me reiterate economists do not agree on any quantitative measure of structural unemployment in the economy, nor do they agree that it is a pressing issue moving forward. Paul Krugman has argued that structural unemployment is a non issue under present circumstances, while Narayana Kocherlakota of the Minneapolis Fed is worried that structural unemployment is ultimately eroding the Federal Reserve’s capability to fight high unemployment through conventional monetary policy tools. I’ll let the experts continue haggling over the precise extent of the problem. If President Kocherlakota is correct, however, policy makers need to ask some serious questions about the efficacy of monetary policy moving forward.
Cyclical unemployment, the kind of unemployment arising from downturns in the business cycle, can be addressed by the Fed by lowering short term interest rates to give businesses greater incentive to invest in new production, which of course requires new workers. The key idea here is that the Federal reserve can stimulate the demand side of the labor market – employers looking to hire new workers.
Structural unemployment is essentially a phenomenon of the supply side of the labor market. Employers are looking to hire, but the right workers simply aren’t available to fill the needed positions. Dropping interest rates can help incentivize would be employers, but cannot address the fundamental lack of supply for labor in the desired positions.
So what can be done at the policy level to help workers find the skills needed to fill new jobs? That’s a tough question. Making a decision to uproot one’s family to a new location where jobs are plentiful or to learn new skills is something few people take lightly. In the most recent recession, the federal government extended unemployment benefits to keep families solvent while these issues work out, but this is a band aid solution at best.
A more robust solution? Policy makers need to focus more on the solutions readily available to them. American community colleges provide an affordable means for people of all ages and backgrounds to learn new high-demand job skills in a relatively short time. This is particularly true in the health services industry, where a two year degree in nursing or physician’s assistance can open the door to jobs in an industry struggling to hire qualified candidates despite the high unemployment numbers.
Community colleges offer a number of remediary, certification, and continuing education courses as well as many other resources to help unemployed Americans change the course of the career or simply stay at the top of their game.
What other options are out there to help gain new skills in a hurry? I’m curious to hear your advice (No, I’m perfectly content blogging at the moment. No, honestly!) I’d also like to hear the experience of those who have struggled for an extended time to find employment. Are jobs available in your area, or simply jobs you are unqualified for? Have any of you seriously considered returning to school or relocating in hopes of finding greener pastures? Inquiring minds want to know.
Tanner has spent the last four years not only gaining insight into the macroeconomic trends that produced the Great Recession, but also learning how to restore his own finances from losses during the 2007 housing market collapse. Having gained experience from both academia and the school of hard knows, Tanner is uniquely qualified to interpret the impact of macroeconomic happenings on your wallet.
When not pontificating on all issues financial, Tanner enjoys pontificating on all issues non-financial. Contrariety is among his more heavily indulged vices. He also enjoys cycling, music, wine, literature, sports, and traveling anywhere he will be tolerated. He currently resides in Des Moines, Iowa. Besides blogging, he hopes to one day work in economic policy analysis, either at a think tank, government agency, consulting firm, or non-profit organization.
- The Golden Fleece - October 25, 2013
- Don’t let unemployment keep you down - October 17, 2011
- Congress and the Deficit Deal: The Buck Stops Somewhere Else - August 8, 2011