The Great Jobs Mismatch

The Great Jobs Mismatch

By Robert Samuelson - June 20, 2011

WASHINGTON -- One puzzle of this somber economy is the existence of unfilled jobs in the midst of mass unemployment. You might think (I did) that with almost 14 million Americans unemployed -- and nearly half those for more than six months -- that companies could fill almost any opening quickly. Not so. Somehow, there's a mismatch between idle workers and open jobs. Economists call this "structural unemployment."

Just how many jobs are affected is unclear; there are no definitive statistics. Economist Harry Holzer of Georgetown University thinks the unemployment rate might be closer to 8 percent than today's 9.1 percent if most of these jobs were filled. That implies up to 1.5 million more jobs. Economist Prakash Loungani of the International Monetary Fund estimates that 25 percent of unemployment is structural; that's more than 3 million jobs. A recent survey of 2,000 firms by the McKinsey Institute, a research group, found that 40 percent had positions open at least six months because they couldn't find suitable candidates.

Let's acknowledge two realities. First, though structural joblessness is important, the main cause of high unemployment remains the deep slump. In the recession, jobs dropped 20 percent in construction, 15 percent in manufacturing and 7 percent in retailing. Only a stronger economy can remedy this unemployment.

Second, a big economy like ours always has some vacancies. People quit or get fired. Hiring procedures grind slowly. Some highly specialized jobs are inherently hard to fill: say, a transportation engineer fluent in both Chinese and English (a real-life example).

Still, the job mismatch hobbles recovery and bodes ill. The harder it is for workers to find jobs, the longer they stay unemployed -- and this, in turn, worsens their prospects. "Long-term unemployment sends a negative signal to employers: What's wrong with this person?" says Holzer. Some jobs lost in the recession and the associated skills won't ever return. "Workers' networks (contacts) atrophy," he adds. "Their skills look more obsolete."

As more workers become less employable, some economists are raising their estimates of "full employment" -- the unemployment rate consistent with stable inflation. It could be 6 percent compared with 5 percent before the recession, says Mark Zandi of Moody's Analytics. Trying to push unemployment below 6 percent with easy credit would risk higher inflation.

Carl Camden, head of the temporary-employment company Kelly Services, says that skill shortages span a wide array of jobs, from electricians to CAD/CAM operators (computer-aided design and manufacturing) to Ph.D. scientists for clinical drug tests.

"You can't find engineers to take jobs in many cities," says Camden. "We have three jobs for every candidate."

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Copyright 2011, Washington Post Writers Group

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