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PA Workforce Development Association Conference: Telling the Workforce Story

More Evidence That Lack of Jobs, Not Lack of Skills is Behind Our Unemployment Problems

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Earlier this week, I posted that we need to move out of our "skills deficiency rut" when it comes to how we are serving the long-term unemployed. We have to stop acting like the main issue they are facing is their lack of skills. 

Now there's new data to support the idea that long-term unemployment is largely about a lack of jobs. The Economic Policy Institute reports that long-term unemployment is elevated for all workers at all educational levels. 

The long-term unemployment rate is between 2.9 and 4.3 times as high now as it was six years ago for all age, education, occupation, industry, gender, and racial and ethnic groups. Today’s long-term unemployment crisis is not at all confined to unlucky or inflexible workers who happen to be looking for work in specific occupations or industries where jobs aren’t available. Long-term unemployment is elevated in every group, in every occupation, in every industry, at all levels of education.

Elevated long-term unemployment for all groups, like we see today, means that today’s long-term unemployment crisis is not due to something wrong with these workers, it is due to the fact that businesses across the board simply haven’t needed to significantly increase hiring because they haven’t seen demand for their goods and services pick up enough to warrant it.

In other words, a big part of the unemployment problem (both long-term and short-term) is lack of jobs.

You can see that in the figure below--there's a gap of 7 million jobs between where we are currently and where we should be if we're going to be on pace to replace all the jobs we lost during the recession and keep up with new entrants into the labor force. 

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Federal Reserve Chair Janet Yellin also makes a multi-point argument for lack of jobs being the problem  in a speech from March 31. In it, she points to evidence that there is still a great deal of "slack" in the economy, meaning that there are more people willing and capable of filling jobs, than there are jobs available for them to fill. For example:

  • There are 7 million people who are working part-time, but who would prefer to be working full-time
  • Voluntary quits are at a much lower level than their pre-recession levels, indicating that people are afraid to leave their jobs for fear they won't find another one or that they aren't able to find new jobs in the first place. 
  • Wage growth has been modest at best, barely keeping up with inflation in some cases and actually declining in many occupations. If employers were really desperate for workers, we would see wage wars going on. That simply isn't the case. 
  • The labor force participation rate is falling for workers of all demographic stripes, including people in their peak earning years. This suggests that many have simply given up looking for work and have dropped out of the economy. 

Although there are obviously  unemployed workers who need re-training and/or skills upgrades to be competitive, the real issue for all job seekers is the lack of jobs. Focusing on training issues isn't going to help us address the bigger issue that once you're trained, it's still incredibly difficult to get hired, particularly into a full-time, well-paying job.  

As workforce development professionals, we need to start focusing on what we can do to help job seekers in a market where there aren't enough jobs to go around and where the jobs that are available don't pay the bills.

Job search help and re-training only work when there's a reasonable chance that someone will be hired. We need to be putting our attention on other ideas and strategies for supporting the unemployed. 

 

Comments

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Maria Herald, CWDP

I absolutely agree. It's not a secret, just not something people are caomfortable/willing to tak about. The question is how to address it. I'll be interested in hearing how effective the Speedy Start Up is.

Michele

I wonder why people are unwilling to talk about it, Maria. To me, if we don't talk about what's really going on, we aren't going to get to real solutions. Even if we don't have a clue at the beginning, if we started engaging in this discussion, we'd start to identify ideas we could work with. That's why I'm interested in seeing what we can do with The Speedy Start-Up and doing more to encourage self-employment.

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