theatlantic | Close your eyes and picture the scariest thing you can think of.
Maybe it's a giant spider or a giant Stay Puft marshmallow man or
something that's not even giant at all. Well, whatever it is, I
guarantee it's not nearly as scary as the real scariest thing in the world. That's long-term unemployment.
There
are two labor markets nowadays. There's the market for people who have
been out of work for less than six months, and the market for people who
have been out of work longer. The former is working pretty normally,
and the latter is horribly dysfunctional. That was the conclusion of
recent research I highlighted a few months ago
by Rand Ghayad, a visiting scholar at the Boston Fed and a PhD
candidate in economics at Northeastern University, and William Dickens, a
professor of economics at Northeastern University, that looked at
Beveridge curves for different ages, industries, and education levels to
see who the recovery is leaving behind.
Okay, so what is a Beveridge curve? Well, it just shows the relationship between job openings and unemployment. There should
be a pretty stable relationship between the two, assuming the labor
market isn't broken. The more openings there are, the less unemployment
there should be. If that isn't true, if the Beveridge curve "shifts up"
as more openings don't translate into less unemployment, then it might
be a sign of "structural" unemployment. That is, the unemployed just
might not have the right skills. Now, what Ghayad and Dickens found is
that the Beveridge curves look normal across all ages, industries, and
education levels, as long as you haven't been out of work for more than six months.
But the curves shift up for everybody if you've been unemployed longer
than six months. In other words, it doesn't matter whether you're young
or old, a blue-collar or white-collar worker, or a high school or
college grad; all that matters is how long you've been out of work.
