When an economy is humming, there are lots of job openings and low unemployment. When the economy is malfunctioning, there are few openings and unemployment is high. The regular relationship between job openings and unemployment is called the Beveridge Curve. If the curve shifts outward it means that a given level of job openings is associated with higher unemployment.
AEI’s Kevin Hassett:
It has been almost four years since the end of the recent recession, but the U.S. has yet to return to its previous levels of unemployment. The shift in the Beveridge curve suggests that it may never do so. The points labeled A and B illustrate why. In February 2013, the job-openings rate (unfilled jobs as a percentage of total jobs) was 2.8, a rate that would have corresponded with an unemployment rate of about 5.2% on the Beveridge curve from 2001 through August 2009. The unemployment rate in February, however, was 7.7%—almost two and a half points higher.
Hassett argues the shift is mainly explained by a) the more than doubling of long-term unemployment from pre-recession levels, and b) the now-documented reluctance of business to hire folks who’ve been out of work for more than six months.
Chosen excerpts by Job Market Monitor
via America’s broken jobs machine and the long-term unemployed | AEIdeas.
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Posted by Gregory | September 9, 2014, 1:25 pm