“Structural Unemployment”: K-Thug Throws Down

Nobel Prize winner Paul Krugman uses his latest NYTimes column to take on the “Structure of Excuses“:

… [A]ll the facts suggest that high unemployment in America is the result of inadequate demand — full stop. Saying that there are no easy answers sounds wise, but it’s actually foolish: our unemployment crisis could be cured very quickly if we had the intellectual clarity and political will to act.
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In other words, structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions.
[…]
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Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category. Only three states, with a combined population not much larger than that of Brooklyn, have unemployment rates below 5 percent.
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Oh, and where are these firms that “can’t find appropriate workers”? The National Federation of Independent Business has been surveying small businesses for many years, asking them to name their most important problem; the percentage citing problems with labor quality is now at an all-time low, reflecting the reality that these days even highly skilled workers are desperate for employment.
[…]
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I’ve been looking at what self-proclaimed experts were saying about unemployment during the Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs — and suddenly industry was eager to employ those “unadaptable and untrained” workers.
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But now, as then, powerful forces are ideologically opposed to the whole idea of government action on a sufficient scale to jump-start the economy. And that, fundamentally, is why claims that we face huge structural problems have been proliferating: they offer a reason to do nothing about the mass unemployment that is crippling our economy and our society.

There is no shortage of jobs that need doing in America, from repairing our crumbling infrastructure to digitizing millions of pages of public records to adding desperately needed hands in schools, hospitals, and nursing homes. Many unemployed and underemployed Americans already have the necessary skills, and many more are capable of acquiring those skills — if the people at the tip of the economic pyramid were as interested in preserving our shared community as they are in preserving every last scrap of their hoarded power and resources.

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41 replies
  1. 1
    NobodySpecial says:

    Fucking A right.

    I have quite a few people come through the place I work who work in factories and the like. They talk about mandatory overtime and extra shifts on weekends. They talk about the temp to supposed hire thing where people are hired for a couple of months, then let go.

    I never hear about those employers adding full-time help. Instead, they’re pocketing the money.

    Same with the banks; they’re not loaning out the money to businesses to expand because they’re pocketing the money.

    Of course, when the business goes belly up because no one can buy what they’re producing? They still have the money.

    I can haz French Revolution 2.0 naow?

  2. 2
    Odie Hugh Manatee says:

    Whether or not they mean to, the rich here really want a kind of Mad Max world where they are the rulers over their individual piles of cash and sycophants while everyone else gets to fight over the remaining scraps. Business sees nothing wrong with screwing everyone out of every dollar they can. Supply and demand don’t mean shit when you pretty much control the supply. Regulators and regulating don’t mean shit when you can buy the regulators off and bribe those who write the regulations.

    Capitalism baby!

    At least until they break the system and need to be bailed out. Again.

  3. 3
    Viva BrisVegas says:

    if the people at the tip of the economic pyramid were as interested in preserving our shared community as they are in preserving every last scrap of their hoarded power and resources.

    I think the Curtainrod Theory of Economic Expectations applies admirably in this case.

  4. 4
    BD of MN says:

    I haul steel to a lot of mom and pop manufacturing places in MN and WI, (the type of places where it’s the owner driving the forklift, there’s no suits anyplace) and what you describe is pretty close. Lots of OT, temp workers (or just calling back people they’ve laid off), etc. but don’t forget OT and temps are pretty expensive. They hire this way because they can’t see long term demand. They’re busy and buying steel this week, but they’re paying more for shipping by buying smaller volumes because they don’t want to get stuck hanging on to inventory they don’t know for sure will get bought. They know what they’re doing the next few weeks, but just can’t forecast out…

  5. 5
    Michael D. says:

    I think Krugman has a new photo over there at NYT. He’s aging a bit, methinks.

  6. 6
    geg6 says:

    Gawd, I just love that man. Speak it out loud, Brother Paul.

    Too bad nobody but us DFHs listen to him.

  7. 7
    R. Porrofatto says:

    It’s called Capitalism, not Businessism, which is just one of the reasons why even big business is always at the mercy of Wall St. Banksters and their vassals don’t suck trillions out of the economy and treat themselves to $100 million dollar bonuses by giving a shit about unemployment, infrastructure, or America, or anything else that can’t be translated into more money for themselves — and by the way, they are doing just swell right now, thank you.

    Outsourcing jobs and capital investment overseas (now in the trillions, an amount that has tripled since 2000) is simply a byproduct of the pursuit of cheap labor and ever higher profits; their partner in crime in all of this has been Congress — among other egregious acts, tax breaks for investing overseas.

    The only thing Republicans (and sad to say, many Democrats) really pledge to do is employ “structural employment” shock doctrine to eviscerate Social Security, Medicare, and pretty much anything that benefits the American middle class (there isn’t much for the poor that hasn’t already been shredded), i.e., people who don’t matter, to feed the insatiable greed of the tiny percentage of Americans who really count.

  8. 8
    Geeno says:

    Talk about your big “if”s

  9. 9

    This is good to hear; it means we can expect to see unemployment drop significantly as the economy recovers, instead of staying high.

  10. 10
    Sly says:

    For every job opening there are five people looking to fill it and, except for a small number of areas, this is fairly uniform across the country. It’s not just that surveyed businesses are putting labor quality as their lowest concern, they’re putting poor sales at their highest. Which is indicative of… drum roll… poor demand.

    As Krugman wrote, Bill Clinton, for some ungodly stupid reason, has been spouting this nonsense around the past few weeks. No idea why. It’s not like retraining and relocation programs wouldn’t cost the government any money if labor quality was the actual problem that needed fixing.

    I’d be willing to lay good odds that he’s just channeling Bob Rubin again.

  11. 11
    debbie says:

    For every job opening there are five people looking to fill it.

    Ah, the magic of numbers substituting for facts on the ground. How many of those jobs are jobs so lousy no one wants them? How few of those jobs are fulfilling or even interesting? I’ve applied for a few jobs recently (communications/marketing/publications) where the company received close to 300 responses.

  12. 12
    The Raven says:

    I wonder what Krugman is going to be writing in ten years? Rare for an economist, his loyalties are with all of the people rather than with the rich people. His heart is breaking. How is he going to stand up under the strain?

  13. 13
    Nick says:

    I’ve applied for a few jobs recently (communications/marketing/publications) where the company received close to 300 responses.

    Not to debunk your point, but we had that same problem in 2007.

  14. 14
    Thomas says:

    Once the Goppers re-take power the deficit will magically cease to be a problem once again and the tea baggers will be once again ignored instead of being the story that the beltway media obsesses over. Sure the GOP will never pass anything labeled a stimulus but they’ll probably pump several hundred billion in new spending into new weapon systems we don’t need. Might be as close to a second stimulus as we’ll get which is better than nothing I imagine.

  15. 15
    SiubhanDuinne says:

    @Michael D #5:

    If you check the photos of all the regular NYT columnists, you’ll see that they all have new photos and they all look older. I’ve been speculating that the new portrait roll-out was meant to coincide with the Op-Ed Page’s 40th anniversary. For some reason, the Times chose dark backgrounds for all the new pix.

    I’m puzzled by MoDo’s photo, though. It looks like the identical image as before, only with the dark backdrop. Haven’t had a chance to do a side-by-side comparison, so I could have this wrong.

    Sorry, I managed to wrench this thread way off topic. Now returning you, etc.

  16. 16
    PurpleGirl says:

    @joe from Lowell: Ain’t gonna be no recovery if people don’t have the money to pay for housing and buy things. With no income and no UI benefits people can’t do anything to effect a recovery.

  17. 17
    Omnes Omnibus says:

    @Nick: @debbie:

    There are always going to be positions that get an inordinate number of applications; that does not tell us much. The fact that there are 5 to 6 times times the number of job seekers than there are job openings does say something.

  18. 18
    WereBear says:

    This is the end game of thirty years of letting sociopaths dictate our terms of engagement.

    I’m not exaggerating for effect. I was just reading how John Foster Dulles was forced, by all his other partners, to agree to the firm giving up their Nazi investments; after the word about the death camps came out. This was a guy with plenty of money… and he cried as he signed the papers.

    That kind of attitude has become institutionalized in our corporate culture. Only money is holy; and whatever it touches becomes sanctified by profit.

  19. 19
    Dennis SGMM says:

    Lenin was quoted as saying that, “The Capitalists will sell us the rope with which we will hang them.” Only we didn’t sell anyone the rope – we gave it away to save money on manufacturing costs. Two hundred years of innovation, R&D and plain old trial-and-error have been given away for cheap manufacture in less than two decades while people like Bill Clinton, among many others, explained to us that we didn’t need all those nasty old jobs because we’d all have groovy, high-tech jobs and those are much, much better.

    Turned out that roughly two-thirds of those groovy, high-tech jobs consisted of selling each other stuff made elsewhere and paid for by money spun out of thin air. The structural problems in the US economy are the results of insane, short sighted, policy-making by both parties and getting them to reverse those policies is going to be nearly impossible because the “right” people have become even wealthier as a result of them.

  20. 20

    I suspect that some of the conservaive types, who really aren’t ogres, hope that the current economic crisis is cyclical. Actually, they might even believe it.

    There is at least one person in the world [me] who thinks that the problem is not the normal boom-and-bust of capitalist cycles but something more basic:

    We are running out of paying customers. Most customers are also the workers. The workers have been robbed of so much, they no longer have money to buy things. So unemployment rises. And as the jobs evaporate, the supply of money within the working class shrinks. There is even less money to spend on buying goods and services.

    Now, wasn’t I nice? I didn’t say that the upper crust exploited their most important asset [the worker/customer] until it broke. I didn’t say that is what you would expect from capitalism. I didn’t say that if we “fix” the system this time, it will fall apart again and for the same reason.

    And, of course, I didn’t say we really need some sort of an economic system that isn’t driven by taking more than you give [which is where profits come from].

  21. 21
    WereBear says:

    @Dennis SGMM: And I didn’t hear anything about the kind of crap we’d get offered in return.

    I can’t even get a coffee maker that works anymore! We’ve gone retro and bought a big French Press for $19. And you’d have to pay me to buy clothes at WalMart; they must be made of cellulose because they vanish in the washer by six months.

    Cheaper goods… is cheaper goods.

  22. 22
    PurpleGirl says:

    Just read the Krugman column at NYTimes.com. They are saying that comments have been closed, but there are no comments showing at this time. It’s interesting that the NYTimes doesn’t want comments on this column.

  23. 23
    Dennis SGMM says:

    @WereBear:
    Yep. I was a prototype machinist for more than two decades. Knowing that something can be made is still in many cases a long way from knowing how to make it. That we exported the “how to make it” along with the jobs is possibly one of the worst, and least mentioned, aspects of offshoring.

  24. 24

    […] this, Annie Laurie draws stark conclusions: There is no shortage of jobs that need doing in America, from repairing […]

  25. 25
    WereBear says:

    @Dennis SGMM: Very true! Mr WereBear’s favorite example of this is how the Allies came across some amazing examples of German engineering after the war; when all the people who knew how to do it were either dead or in hiding.

    Some of it still hasn’t been reverse engineered successfully, he says.

    Speaking of which, we are far worse off than we were during the Great Depression, because we no longer have the same production capacity that let us win that war.

    Something for the idiots who did this to us to think about.

  26. 26
    Odie Hugh Manatee says:

    I recently had to replace a dust cap on the front end of our car. I went to a local parts store and picked one up. When I went to put it on it wouldn’t fit. Why? Because although they punched the part out on the machine, they never re-flared and smoothed the edge/flange of the cap. A few minutes with the Dremel cleaned it up so it would fit.

    I have installed a ton of these simple items and now that they are made overseas they will not fit unless you make it do so.

    When Chinese forged steel crankshafts first showed up here the failure rate was over 60%. I hear they got it down to below 30% now. Chinese turbochargers? They last six months on average.

    But they’re cheap!

  27. 27
    Moses2317 says:

    And yet, on the flip side Republicans are working to make sure that an additional 130,000 people are laid off from their jobs this week by killing the TANF Emergency Fund program.


    Winning Progressive

  28. 28
    Sly says:

    @PurpleGirl:
    Krugman used to get a lot of crackpots from Mises.org who posted twenty pages of ad hominem masked as academic discourse in the comments section of his blog, before he started actively deleting them.

    It’s possible that the site admin is pouring through a shitstorm of posts from the same people and temporarily closed it to future comments.

  29. 29
    Corner Stone says:

    I am not sure that I am disagreeing with Kthug when I say that IMO, “structural unemployment” is the goal.
    There are things that could be done to bring down unemployment in specific regions and industries, but no one in the moneyed class wants to invest in America or the American worker.
    It’s fairly obvious by the policies and outcomes of the last 20+ years that they are actively removing their capital from stateside and putting it to work in other countries with easier to exploit, large pools of undereducated workers.
    Eventually they’d like this to be the uniform scenario worldwide.

  30. 30
    Larry Signor says:

    @Linda Featheringill: You have pointed out the conundrum of market economics, or the chicken or the egg riddle. At this point in time there is no reason to think the unemployment rate will not rise. UI benefits are expiring, stimulus is receding, housing has tanked, GDP is being revised downward, austerity is the flavor of the moment and winter is on the way. Which of these conditions could be considered expansionary? The labor market looks to be a nightmare by spring if policy makers do not heed Dr. Krugmans advice.

  31. 31
    Mark says:

    @Linda Featheringill: I have a friend who keeps repeating bland pablum like “Don’t worry, things will get better” to me. She also thinks that Republicans can’t possibly be ogres, but she can’t name one who isn’t.

    This is indicative of a second problem here, which is seemingly apparent only to foreigners like me: Americans are a bunch of goddamned polyannas who truly believe in their own exceptionalism. Grow up anywhere else even in the richest countries in the world and you know better – you know your parents can be unemployed for years and life won’t improve just because.

  32. 32
    PurpleGirl says:

    @Sly: What’s also interesting is that several of his blog posts coordinated with the column do have comments. And on the whole, at least of the 50 or so I read, the readers were quite supportive of him.

  33. 33
    PurpleGirl says:

    @Corner Stone: What I think he is focused on the “mismatch” of skills and jobs structural excuse. What I see as more problematic long term is the structural aspects of technology making many jobs obsolete. That, I think, is very much being planned. That means that there will be fewer jobs across the spectrum, period. Why have three administrative assistants when one can do the same amount of work with computers.

  34. 34
    Sad_Dem says:

    Well said, Anne. I think you are exactly right.

  35. 35
    Thoughtcrime says:

    This should be permanently installed in front of the New York Stock Exchange: http://www.designboom.com/webl.....milan.html

  36. 36
    priscianus jr says:

    @SiubhanDuinne:
    Actually, we’re all getting older. Funny how that happens.

  37. 37
    Jager says:

    I used to run a division of a company owned by a “cent-millionaire”. Between Thanksgiving and Christmas of 2007 he attended a small, by invitation only, meeting of about 100 people. The speaker on the second day was Goldman Sachs CEO Lloyd Blankfein. When the meeting was over, my boss called me and was very upset, he said we needed to meet right after the holidays and replot our strategy for 2008 because “bad things” were going to happen. In January, he flew out to SoCal, at that point we had 95% of of 2008 goal on the books and we had increased our business 27% in ’07. There was no discussion, he had me reduce salaries by various percentages ranging from from 10 to 25%, I was told to fire 6 people, 4 from sales (they happened to be the AE’s with the highest draw against commission) and we cut budgets in all departments. In less than a month we went from a high spirited holiday party where he toasted the staff on its success in 07 to starting 08 on the worst of notes. We ended the year down 14% from 07 (most businesses in our category were down over 20%) and in early ’09 I quit to start my own consulting business. To this day I have no idea what Blankenfield told the group, what ever it was, it scared the shit out of my old boss. He panicked, tried to “save” his way to prosperity, damaged the business, the people and the clients. Since I left they are on their 3rd GM, they’ve rolled 11 sales people and two sales managers and they are below 2005 revenue. I think it was a typical reaction by business. In 2001 I ordered a new car, it came in the week after 9/11. When I went to pick it up, my salesman was no longer at the car store, I asked the sales manager, why? He said we had to cut back after 9/11, same old shit.

  38. 38
    The Main Gauche of Mild Reason says:

    @Jager:

    One of the weirdest ideas that seems to be contagious these days is the idea that high-echelon businessmen are smart. Sure, there are smart people among them, but SOMEONE has to be listening to Jim Cramer’s nutty stock tips, and it ain’t middle class people (as CNBCs viewership is predominantly very affluent).

  39. 39
    jl says:

    How did the idea that structural unemployment was a problem begin? I don’t think that the neoclassical macroeonomists think all that far ahead in planning out excuses for why their models do not explain anything.

    I think because of two things. First, the case can be made that there is a serious structural problem in starting a recovery. Post WWII recoveries almost always start in the residential construction industry: building new houses, apartments and condos (often replacing older single family stock, or fixing up existing stock that is underutilized. The structural problem, which was seen as the recession started by Keynesians and old fashioned business forecasters, was what economic activity would replace residential construction to drive this recovery? No one could think of anything. The housing boom made any strong and sustained residential construction recovery very unlikely.

    The second thing is that labor productivity is not behaving the way it usually does. Usually labor productivity falls in a recession, but this time it rose. The fall in most recoveries is attributed to businesses hoarding labor in expectation of the recovery. This recession it appears that they hoarded no labor at all, either becuase outsourcing has become vastly easier or more acceptable, or becuase few businesses saw a quick recovery, or becuase the fall in paper wealth and availability of credit meant that they could not finance it.

    The equilibrium macroeconomics people have run through a grimly hilarious and humiliating series of excuses about why the labor market is acting as it has. First was the usual line that labor was taking a mass vacation at an optimal time for it. Then they saw the productivity numbers and declared, on the basis of no evidence that all, that the laid off workers were no good and worthless.

    The fact that there is a structural problem in what sector would drive the recovery may have suggested the structural unemployment line, but Krugman has documented that this line was used during the Great Depression too.

    I think Krugman is right, there is no evidence of major mismatch in skills. There are anecdotes and reports of demand for special technical and trade skills that are difficult to find. But they are not large enough to show up in the national statistics, which I think are clearly consistent with poor labor market due to low aggregate demand.

  40. 40
    DPirate says:

    They’ve managed yet again to put off the collapse for a while, but I am really looking forward to it. Then all the communists can point to America and say capitalism is a failed system.

  41. 41
    Bill Murray says:

    Isn’t the answer, at least with Bill Clinton and various other center and further right politicians and media types, that if unemployment is structural, there is nothing that can be easily and quickly done by the government to reduce unemployment.

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