The Breakdown

Explaining Southern California's economy

Why is the recovery jobless? Skills, baby. Skills.

Victoria Long has been unemployed for two and a half years and her job search continues. She spends her time in an employment recruiting office as she searches for work.
Victoria Long has been unemployed for two and a half years and her job search continues. She spends her time in an employment recruiting office as she searches for work. Mae Ryan/KPCC

First, the good news: there are jobs available in America! Now, the bad news: there aren't enough people with the right skills to take them. This is from Bloomberg Businessweek:

The number of positions waiting to be filled this year has climbed to levels last seen in 2008, when the jobless rate was around 6 percent. The housing bust and ensuing financial crisis put people out of work whose skills may not correspond with those needed by the health-care providers and engineering firms where jobs go wanting.

[...]

A dearth of skilled applicants may prevent the unemployment rate from declining further and could crimp consumer spending, which accounts for about 70 percent of the economy. Companies also may remain reluctant to expand their workforces as the threat from Europe’s debt crisis and political gridlock in the U.S. weighs on the economic outlook.

Over the three months ended in October, the average number of positions waiting to be filled climbed to 3.26 million, the most in three years, according to Labor Department data released yesterday in Washington. The jobless rate, which averaged 5.8 percent that year, was at 9 percent in October. It fell to 8.6 percent last month, in part reflecting a drop in the size of the labor force, the agency’s data showed earlier this month.

Consider that last point: as the number of available jobs has increased, the size of the labor force has actually shrunk. That's your skills mismatch right there. If you're not looking for work in healthcare or engineering, then you're...basically out of luck. After a while, frustration, even despair, sets in — and you quit. 

And not necessarily to get the training you need to acquire those skills. You may leave the workforce, effectively, for good. Your potential contribution to the economy — your labor — disappears. And the overall economy shrinks accordingly.

It may not be possible for governments to step in here and provide retraining. For starters, the jobs that are out there, unfilled, may require skills that are expensive to acquire. Engineers don't grow on trees.

Second, the amount of time required to turn a construction worker into a healthcare worker is not trivial. We could be into another recession by the time the person who was nailing houses together in Nevada is ready to operate diagnostic equipment in Texas.

This is, in other words, structural unemployment. Significant changes are necessary to eliminate it. Education is obviously the key. But education doesn't come cheap. So it could be quite some time before the unemployed Americans who are still looking realign themselves with what the economy truly needs.

Follow Matthew DeBord and the DeBord Report on Twitter.

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