Wednesday, January 19, 2011

Unemployment data leave economists puzzled. Can they explain anything at all?

For corporate America, the Great Recession is over. For the American work force, it’s not. 
No, this is not a quote from Robert Reich, who has consistently been trying to get policymakers to focus on the horrendous joblessness of the economic recovery.
That was a quote from the NY Times' business columnist, David Leonhardt, who writes:
The unemployment rate is higher in this country than in Britain or Russia and much higher than in Germany or Japan, according to a study of worldwide job markets that Gallup will release on Wednesday. The American jobless rate is also higher than China’s, Gallup found. The European countries with worse unemployment than the United States tend to be those still mired in crisis, like Greece, Ireland and Spain.
Economists are now engaged in a spirited debate, much of it conducted on popular blogs like Marginal Revolution, about the causes of the American jobs slump. Lawrence Katz, a Harvard labor economist, calls the full picture “genuinely puzzling.”
Leonhardt notes that employees having a lot more power in Western Europe or Canada, compared to here in the US, where employers reign supreme, might be a significant factor.  Whatever the reasons might be, I agree with him that:
The jobs slump has become too severe to disappear anytime soon. It will be part of the American economy and American politics for years to come. But there is no reason to treat it as a problem that’s immune from solutions. For starters, it would be worth figuring out what other countries are doing right.
Meanwhile, here in Oregon, unemployment rates don't want to budge:
Oregon lost 1,800 payroll jobs in December as the unemployment rate held flat at 10.6 percent, essentially unchanged for more than a year. 
Just awful.  A leading economics blogger, and a fellow Oregonian, Mark Thoma, has a timely column on the urgency to reinforce America's social safety net

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