WaPo focus on structural factors in jobs crisis may be off

Since at least last year, economists have been arguing about the root cause of our ongoing jobs crisis. Is the problem a lack of demand in the labor economy? Or does the chronic high level of unemployment stem from more structural factors -- such as a mismatch between the skills that workers in a given location possess, and the skills that today's jobs require?

The answer is crucial, because fixing a demand problem would require more government stimulus, while addressing a structural mismatch would mean a longer-term process of education and retraining -- an effort President Obama alluded to in his recent State of the Union address.

Today, the Washington Post weighs in on behalf of the "structural" explanation. Post reporter Michael A. Fletcher notes that Fresno, Calif. has a jobless rate of 16.9 percent -- way above the still-high national rate of 9.4 percent -- but that many employers in the region have job openings, and can't find the right workers to fill them.

The city's mayor, Ashley Swearengin, describes her changed thinking on the issue. "For years, I thought the only challenge was that businesses were not growing and that we needed to find ways to increase demand," she told Fletcher. But she said she had second thoughts abou that strategy after reviewing a 2004 survey of local employers discovered thousands of job openings despite relatively high unemployment. "The survey revealed a whole other problem. Certainly, a company needs demand for a product. But if they don't have people with the skills to fill jobs, it is hard to sustain growth."

But not everyone is persuaded that the lesson of Fresno's situation applies more broadly. "When I crunch the numbers, I don't find evidence of structural issues as a key factor," Heidi Shierholz, an economist with the progressive Economic Policy Institute, told reporters on a conference call.

Shierholz allowed that in some locations, structural factors may be in play. But as a broad explanation for the jobs crisis, she said, the numbers just don't back up that view of things. "I did a county-by-county breakdown, and there are very few counties that have a labor market that could plausibly absorb new workers," she said. "It's not a geographical problem, it's not a skills-mismatch problem, when you take it to the data level."

Instead, Shierholz said there just aren't enough jobs, noting that the ratio of workers per job opening now stands at a forbidding 4.4 to 1. "There's just a lack of job openings across the board."

Dean Baker of the progressive Center for Economic and Policy Research makes essentially the same argument. "If the economy were actually suffering from a problem of structural unemployment, then we should be seeing substantial sectors of the economy, either by region or occupation, where wages are rising rapidly. We don't see this," he wrote today in response to the Post report. "There is no major industry or occupational grouping where there is evidence of large pay increases. We should also see big increases in average weekly hours, as firms try to work their existing workforce harder due to the unavailability of additional workers. We don't see this either."

Shierholz and Baker are far from the only respected observers who have publicly questioned the structural explanation. New York Times columnist Paul Krugman has called it "a fake problem which largely serves as an excuse for not pursuing real solutions" to the jobs crisis.

And Shierholz doesn't see things getting better soon. She said she expected that the government's monthly jobs survey, to be released Friday, will show a gain of 130-150,000 jobs -- "in the ballpark of what we need just to hold the unemployment rate steady."

The call was held to unveil a new EPI report (pdf) finding that -- three years after the start of the Great Recession in December 2007, and a year and a half after it officially ended -- the U.S. has lost a larger percentage of jobs, 5.2 percent, than at any single point in any post-war recession.

In other words, though the recession may have ended for American businesses, it's still going strong for American workers.

(AP Photo/Ross D. Franklin: Job seekers at a Phoenix career center, Friday, January 2011.)