Monday, March 31, 2014

Jobs and Skills and Zombies

Paul Krugman on Jobs and Skills and Zombies - "But the belief that America suffers from a severe ‘skills gap’ is one of those things that everyone important knows must be true, because everyone they know says it’s true. It’s a prime example of a zombie idea — an idea that should have been killed by evidence, but refuses to die."

He points to this article, Is There Really a Shortage of Skilled Workers? that has lots of graphs showing high unemployment across all education levels, and across all occupations compared to 2007 as well as unemployment vastly outnumbering job openings across occupations and no evidence of hours or wages being ramped up.

Conclusion: it’s aggregate demand, stupid!

There are simply no structural changes capable of explaining the pattern of sustained high unemployment over the last five years. What we have, instead, is an aggregate demand problem. The reason we are not seeing robust job growth is because businesses have not seen demand for their goods and services pick up in a way that would require them to significantly ramp up hiring. The right policies for the present moment are, therefore, straightforward. More education and training to help workers make job transitions could help some individuals, but it’s not going to generate demand, so it will not solve the unemployment crisis. Instead, Washington policymakers must to focus on policies that will stimulate demand. In the current moment this can only be reliably accomplished through expansionary fiscal policy involving such measures as large-scale ongoing public investments and the reestablishment of state and local public services that were cut in the Great Recession and its aftermath.

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