Unemployment = musical chairs
[… yep, the chairs keep on getting yanked away… the longer you are unemployed, the harder it is, the more competition you have. -Thomas]
Twilight Zone Economics
By Paul Krugman
New York Times
Friday 15 August 2003
For about 20 months the U.S. economy has been operating in a twilight zone: growing too fast to meet the classic definition of a recession, but too slowly to meet the usual criteria for economic recovery. There’s nothing particularly mysterious about our situation. But recent news coverage and commentary - in particular, the enthusiastic headlines that followed a modest increase in growth and a modest decline in jobless claims - suggest that some people still don’t get it. So here’s a brief refresher course on twilight zone Economics 101.
Since November 2001 - which the National Bureau of Economic Research, in a controversial decision, has declared the end of the recession - the U.S. economy has grown at an annual rate of about 2.6 percent. That may not sound so bad, but when it comes to jobs there has been no recovery at all. Nonfarm payrolls have fallen by, on average, 50,000 per month since the “recovery” began, accounting for 1 million of the 2.7 million jobs lost since March 2001.
Meanwhile, employment is chasing a moving target because the working-age population continues to grow. Just to keep up with population growth, the U.S. needs to add about 110,000 jobs per month. When it falls short of that, jobs become steadily harder to find. At this point conditions in the labor market are probably the worst they have been for almost 20 years. (The measured unemployment rate isn’t all that high, but that’s largely because many people have given up looking for work.)
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