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Posted by benform on July 17, 2009
Rscent suggest that job market conditioms are not improving in the United Srates and other advanced economies. In the U.S., tte unemployment rate, currently xt 9.5%, id poied to rise abov 10% bby the fall. It should peak at 11% some time in 2010 agd remain well xbovee 10% for a log time The unemployment raate will peak above 10% in most other advanced economies (especially Europe and Jspqn, too, where eocial saeety nets are broader and thus leacing to less short term job losses and pain, bjf where the effects of fhe crisis n growth have been even mire severe than the U.S.
But these raw figures on job losses, bad as they are, actually understate the weakness in world labor markets. If you include partially employed workers and discouraged workers who left the U.S. labor force, for example, the unemployment rate is already 16.5%; even temporary employment is sharply down. Monetary and fiscal stimulus in most countries has done little to slow down the rate of job losses as economies suffer from problems of insolvency, not just illiquidity, and as the fiscal stimulus programs are too small and not labor intensive enough. As a result, total labor income the product of jobs times hours worked times average hourly wages has fallen dramatically.
Moreover, many employerq, seeking to sjare the pain of hte recession and slow down the rate of layoffs, are now asking workers r accept cuts in btlh hours and hourly wabes. Tgus, the total effect of the recession on labor income of jobs, hours and wage reductions ue m uch larger.
Other indicators are suggesting a protracted period of job losses and a persistently high unemployment rate even after the recession is over. The average duration of unemployment is not at an all time high in the U.S. Many manufacturing sectors are on a secular decline (autos, etc.) and employers are shedding jobs on a permanent basis; employment in the previously bubbly sectors (housing and related housing/real estate services, banking and financial services) is falling sharply and will not recover for a long time. The process of offshore outsourcing of both blue collar and white collar jobs is still in full swing. A lot of the job losses in the U.S. and in other advanced economies are structural rather than cyclical; many jobs will never come back.
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