As March rolls into April and the last month of our college career begins, we soon-to-be graduates face some tough choices. Not that these decisions differ all that greatly from those faced by other classes, we just have to make them under somewhat extenuating circumstances. Even with the green chutes of recovery beginning to appear we face the toughest job market in decades, and it doesn't look like it's going to be any better come May 9. I know, I know, we don't want to be reminded, but let's face it - it's not only ours, but the nation's 800 pound gorilla.
As Derek Thompson writes in a recent article in The Atlantic, this may be the mother of all jobless recoveries. His piece serves as commentary on a Cleveland Fed report entitled "Are Jobless Recoveries the New Norm?", which takes a look at why, in spite of modest signs of recovery, unemployment still lingers at 9.7%. The report's author, Murat Tasci, postulates that the recession we are currently climbing out of is much more similar to the previous two that to those before, especially in the fact that pain in the labor market remained for some time after the initial downturn. Fewer new jobs were created or regained leading to longer spans of unemployment for those who lost jobs during the recession.
As one would expect, after two quarters of positive GDP growth this economy is no longer hemorrhaging jobs, but it is failing to create them. Increased demand, hailed as the savior of the labor market by many, will not be so this time around because of the huge amount of slack in the market. As firms begin seeing business pick up they will begin adding more work hours courtesy of their already grossly underemployed staff. The average work week currently stands at 33.1 hours and the number of individuals working part-time (not by choice) has jumped by 4.1 million since December 2007.
The real kicker, though, is that according to the Fed, nearly 95 percent of the change in the unemployment rate is due not to jobs lost, but jobs not found. "During the past three recessions, the decline in the job finding rate has been playing a bigger role in unemployment rate fluctuations. Relative to the change in separations, the job finding rate changed (declined) much more in the past three episodes," writes Mr. Tasci.
There is at least one light at the end of the tunnel, however. Once the economy recovers enough that baby boomers' wealth returns, they'll begin retiring in droves. Maybe this will give the country the empty jobs it needs to make up for the past few decades' loss, and us the opportunities we need to move ahead.
4 comments:
No doubt this is a HUGE problem. The fact that the job finding rate has declined more in the past clearly shows the possibility of discouraged workers. This issue appears worthy of government intention! In America we should implement programs such as Sweden to help our people, especially those who have recently graduated, to help find a jobs. This is definitely a weak point in the U.S.!
As we have learned, one of our country's great strengths is let the markets handle themselves. As the markets handle themselves, so will the jobs. This problem is not all of the baby boomer's fault as firms are still pessimistic to hire and so on. The US government is passing legislation to spur job growth and I feel that should be the extent of their assistance.
This is an interesting article, especially considering most of the class is about to graduate and the job market is not looking very good. The fact that 95 percent of unemployment change is due to jobs not found (rather than jobs lost) is not a good sign. While I feel that there should be more job placement programs in the US, I don't think it should come at the sacrifice of letting the market do its job. Hiring new workers where it isn't necessary, as we've learned, is inefficient and not as productive, which would create a whole other set of problems.
I agree with Charlie because although Sweden does have programs to create jobs, it is unnecessary to pay people to do work that doesn't really need to be done. Doing that creates many problems as we have learned about such as unproductivity and highter costs for firms. The market will create jobs as they need to be filled. It sucks for us that are graduating but at the same time I want to be hired to do work that is actually beneficial to a firm and not to do little petty tasks that abuse my college degree.
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