Dramatic Job Revisions Bust Structural Unemployment Myths
"When the facts change, I change my mind. What do you do, sir?"
- John Maynard Keynes
Fellow Mike Konczal explains why revised jobs data is more evidence that we are not suffering from a structural unemployment problem.
Key Findings
• The debate over structural unemployment that has taken place surrounding high levels of job openings and the Beveridge curve in 2010 needs to be reconsidered. Due to a pre-recession calibration of its birth/death model, the Bureau of Labor Statistics dramatically overestimated the number of job openings throughout 2010. It corrected the numbers for 2009 through 2010 in March 2011.
• On average, there were 172,000 fewer job openings per month in 2009 and 235,000 fewer job opening per month in 2010, reducing the job opening rate by an average of 0.18% over 2010 than had previously been reported. A quick and simple analysis shows that this BLS correction would have dropped estimates of increases in the NAIRU at the time from 1.3% to 1.0%.
• Since April 2010 when concerns about structural unemployment started to enter the debate, the Beveridge curve has almost entirely shifted leftward, with unemployment down roughly 1% and job openings up a meager 0.1%. Runaway unfilled job openings haven’t shown up in the data.
• Even before this, there was considerable evidence that there is tremendous slack in the economy and room for monetary and fiscal stimulus. With this correction, the explanation of an economy held in check by weak jobs growth rather than a weak labor force is even stronger.
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