The unemployment rate is 5.9% while before the Pandemic it was 3.5%.
This article touches on what is called structural unemployment. Here is what I use in class on this:
"Several factors are behind the development: Many workers moved during the pandemic and aren’t where jobs are available; many have changed their preferences, for instance pursuing remote work, having discovered the benefits of life with no commute; the economy itself shifted, leading to jobs in industries such as warehousing that aren’t in places where workers live or suit the skills they have;"
"“The labor market is a matching market where you need to choose something and be chosen by it,” said Julia Pollak, a labor economist at ZipRecruiter Inc., an online employment marketplace.
“This is not a market for shoes and pizzas. It is a very complicated market.”"
"70% of job seekers who last worked in the leisure and hospitality industry say they are now looking for work in a different industry. In addition, 55% of job applicants want remote jobs."
"30.9% didn’t want to return to their old jobs, up from 19.8% last July."
"There wasn’t much the Fed could do about that [the mismatches]- the argument went - and the central bank’s low interest rate policies wouldn’t repair the disconnect."
"Normally, as unemployment rises, job openings fall because employers have an abundance of workers from which to choose. Falling unemployment, on the other hand, is associated with a large number of openings. Economists plot this relationship in a chart called the “Beveridge Curve,” named after British economist William Beveridge"
"What’s unusual now is that unemployment and job openings are both so elevated at the same time and have been for months."
"A study by researchers Gianluca Violante at Princeton University and Aysegul Sahin at the University of Texas at Austin finds that the number of job vacancies exceeds the number of unemployed people with experience in wholesaling, food services, the entertainment sector, finance and healthcare.
Covid itself created skills mismatches, Mr. Violante said. “While the initial increase in mismatch subsided with the reopening of the economy, we are now seeing tightening in some sectors that might be leading to a second wave of mismatch,” he added.
Business skill requirements are shifting as the economy opens and firms hunt for talent.
Employers are easing skills requirements for many low-skilled jobs to find workers in a tight labor market, according to an analysis of job postings by labor-market analytics company Emsi Burning Glass. For instance, the share of hotel-desk clerk job postings requiring “guest-services” skills has dropped sharply since 2019.
At the same time, companies are ramping up requirements to fill high-skilled jobs. The share of aerospace-engineer job postings requiring knowledge of programming language Python and advanced software skills has increased at a rapid pace compared with two years ago, according to Emsi Burning Glass.
The pandemic-induced acceleration of automation and digitization is one factor driving the increase in skills requirements in postings for high-skilled workers, said Matt Sigelman, chief executive at Emsi Burning Glass. The fast-growing skills requirements for knowledge-economy jobs is “going to close out a lot of pathways into those jobs for people who don’t have those skills yet,” Mr. Sigelman said.
Another form of mismatch is geographic. Job openings and available workers are in different places, in part because people moved during the pandemic, and in part because business boomed in unexpected locales."
"Many people have made permanent moves to less dense places, expanding a trend that started before the pandemic.
A Wall Street Journal analysis of U.S. Postal Service change-of-address data shows people from dense urban cores moved to suburbs as well as smaller metros, and from suburbs of large metros to smaller metros, small towns and rural areas. Movement into big cities slowed. For example, people moved from New York City to the shores of Long Island, in addition to Ulster County, N.Y. and Allentown, Pa., the data show.
Stephan Whitaker, an economist at the Federal Reserve Bank of Cleveland, said he saw a connection between people moving and telework. People who can do their jobs remotely have been moving to places within 150 miles of work. “They still want to be able to easily get back to a physical place of employment, but they don’t expect to do it every day,” he said
The shifts create demand for local services in small towns and suburbs that aren’t always equipped with the labor force to meet that demand. It also leaves workers from big city sandwich shops, coffee shops and other service providers with fewer opportunities."
"Among 24 states that have announced a June or July end to supplemental unemployment insurance benefits, the average unemployment rate in May was 4.4%. The rest of states and the District of Columbia set a later end to the program in September. The jobless rate on average in those states was 6.0% in May, though it had fallen more since January than in the states ending benefits early."
"the percentage of workers voluntarily quitting their jobs in May, 2.5%, was near record levels."
"One key question is whether these developments are temporary or long-lasting. Federal Reserve officials are expecting the jobless rate to fall faster than it has. By the fourth quarter, they expect it to reach 4.5%, more than a percentage point from where it was in June. Reaching that goal will be a stretch if the pace of job matching doesn’t pick up.
If the jobless rate doesn’t fall more, the Fed will have a riddle to solve: Should it keep its low-interest rate policies in place longer to spur economic growth and more aggressive hiring by firms, or should it raise rates to forestall inflation pressures in an economy beset by nagging bottlenecks, including those in labor markets."
"Robert Hall, an economics professor at Stanford University, says the job matching process has progressed in two stages. Last year, millions of people were called back to their jobs from temporary layoffs and the unemployment rate descended quickly from 14.8% to 6.7%. This year, the progress has slowed markedly; the jobless rate fell from 6.3% in January to 5.9% in June.
Mr. Hall and Marianna Kudlyak at the Federal Reserve Bank of San Francisco studied the past 10 recoveries and concluded that U.S. job recoveries have a common pattern. In normal times, they find, “unemployment rises like a rocket and falls like a feather.”
“The easy stuff has been accomplished,” Mr. Hall said in an interview. The rest of the job recovery, he concluded, is going to take some time."
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