Saturday, May 16, 2009

Low Number Of US Job Openings:
Is There A Structural Problem?

In addition to unemployment, layoffs and new hires, the government has another statistic, unfilled non-farm job openings.

The preliminary number is 2.0 percent for March 2009 versus 3.6 percent for March 2001. It is the lowest since the series began in 2000.

There are two possibilities for the unusually low demand for workers. Low end user product demand or high worker productivity, which requires fewer workers per unit.

Structural changes during the Great Depression accounted for some of its continuing high unemployment. Manufacturers were switching to a mass produced, assembly line method of production, which decreased the need for workers.

If, there is an equivalent structural production change currently occurring in the US economy, end user demand and GDP can grow without an increase in employment and a decrease in unemployment. The US will have a long-term high structural unemployment rate. Worker retraining will not solve the problem because there are few openings, which indicate a low level of openings with unmet skills in the workforce.

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