Why are Recoveries More Jobless?

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Still waiting for the right jobs or workers (Shannon Stapleton/REUTERS)

The cover story of TIME magazine this week is about the job market. Bill Saporito and reporter Deirdre Van Dyk have done an amazing job of finding employers who want to hire.

Kent Niederhofer can’t find enough mechanical engineers to work for him — in southeastern Michigan. You know, where Detroit is, with its 13.3% unemployment rate. Niederhofer is president of the American branch of Ricardo, an engineering consultancy that designs the power trains of some of the coolest stuff around: Bugatti sports cars, huge wind turbines and unmanned aerial vehicles. “We are doing rocket science every day,” says Niederhofer. “It’s just not on rockets.” So Ricardo got a little desperate, renting a billboard to place a help-wanted ad that featured a picture of a sexy-looking sports car, the tagline “Why you became an engineer” and a Web address for job seekers. He calls it engineer porn.

This might all seem very bullish. And it is. But the story also illuminates a much bigger problem than just the confidence issue or the bank credit issue or any of the other things that we talk about when we talk about why the recovery has been slow. And it says something not just about this recovery, but the last few as well.

The fact that employers are looking for workers when the unemployment rate is near 10% is more evidence that the employment problem is so called structural, meaning we don’t have the right skilled people in the US to fill the jobs we are creating. So those jobs won’t get filled or they will go overseas or they will disappear. So in a way the story may suggest that we are actually a long way off from full economic recovery.

It’s a picture that looks something like Baltimore. A port city once anchored by an enormous Bethlehem Steel plant, Baltimore has lost 313,000 of its 950,000 residents in the past 60 years. But the city can create jobs. Baltimore’s biggest private employer is Johns Hopkins, with 53,532 employees at the university and its hospitals. Hopkins is a force in emerging fields like bioengineering. But university president Ronald Daniels says the institution is creating jobs for skilled professionals in a city lacking them. Its middle class — white and black — is mostly gone. “What we have is a real mismatch. The population that is left behind is truly left behind,” he notes, emphasizing the university’s role in trying to improve Baltimore’s education system. Hopkins has set up training programs for positions like lab technician to allow Baltimore residents a shot at the jobs the institution continues to create. It’s one path to lowering the staggering 16% national unemployment rate among blacks.

The answer to how long it will take before the economy pulls out of its funk really has to do with how long it will take to fill this skills gap. Over the past few decades, recoveries have been more and more jobless. It used to be accepted wisdom that recoveries and hiring happen at the same time. Now, most people believe jobs lag recoveries. An economy that is dominated by information and technology jobs can be great. It produces higher productivity and higher incomes. But as our economy becomes more and more technologically advance the time it takes to fill the skills gap takes longer each time we have a reset. Along with an economy that produces more innovation and a higher level of wealth, and that is great, it is important to recognize comes longer and longer recessions. You can’t have one without the other.

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