Anti Link Rot:: Work of Depressions Watch – NYTimes.com

March 22, 2011, 9:02 am
Work of Depressions Watch
Mark Thoma leads us to new research from the San Francisco Fed showing that recent college graduates have experienced a large rise in unemployment and sharp fall in full-time employment, coupled with a decline in wages. Why is this significant?
The answer is that it’s one more nail in the coffin of the notion that employment is depressed because we have the wrong kind of workers, or maybe workers in the wrong place.
In some ways I think framing the discussion in terms of “structural unemployment” isn’t helpful. It may be better to say that a number of influential people want us to believe that Great Recession is serving some useful purpose — that the economy is “recalculating”, that it’s getting carpenters out of Nevada to jobs where they’re needed, etc.. It’s the same idea that Schumpeter pushed in the now-infamous passage in which he opposed any attempt to mitigate the Great Depression, even through monetary policy:
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The right question to ask, with regard to all such arguments, is, where are the scarcities? If we have the wrong kind of workers, then the right kind of workers must be in high demand, and either be in short supply or have rapidly rising wages. So where are these people? If the problem is lack of skill, then highly skilled workers — such as recent college graduates — should be doing well. If the problem is too many carpenters in Nevada, then non-carpenters somewhere else must be doing well. Who? Where?
Well, if there are such people, they’re doing a very good job of hiding.
This is a demand-side slump; the evidence is grossly inconsistent with any other story.
via Work of Depressions Watch – NYTimes.com.