Wednesday, October 12, 2011

Idle Politicians Today Make Idle Workers Tomorrow

I happened upon an astute insight regarding our jobs problem and the debate over structural and cyclical unemployment – an insight that is not often considered by policy-makers.
Economists and politicians go back-and-forth over why businesses aren’t hiring.  Some say it is mostly due to low consumer spending (cyclical unemployment), and can be solved through public projects to bridge this void in demand until buyers regain their confidence.
Others counter that companies want to hire but simply can’t find enough skilled workers (structural unemployment).  Solving this sort of challenge can take years because it involves either worker retraining programs, or a large-scale migration by those with job-skills to areas with job-openings.
While scanning the online discussion board for my global economy class yesterday, I read this insightful statement from a fellow student.
“It is very difficult to see how such a prolonged period of high unemployment will not significantly increase the structural unemployment.”
In other words, as more people go without work they fall off the potential worker rolls. Individuals who sit idle for months often lose skills acquired in the workplace and employers may then see them as unemployable. Consequently, they become part of the structurally unemployed. 
Regardless whether someone is jobless today due the ups and downs of the business cycle, or to a changing economy that demands new skills, they will certainly be unemployed tomorrow if they continue down the path of job-seeker rather than job-doer.
Solving a future structural problem would be costly, so to policy makers I say, ‘let’s get started on something now.’  The longer we wait, the longer potential workers stay idle, and the worse and more expensive the crisis becomes. 

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