15 Dec 2017

Average Duration of Unemployment

Education 10 Comments

Here’s another good one:

Wait wait, don’t tell me guys: This is actually a sign of progress, because when people got laid off in the late 2000s, they could amuse themselves quite cheaply by playing the free version of Angry Birds.

(In case you are baffled by my comment: People in the comments of my previous posts have been telling me I’m crazy for thinking anything is wrong with the labor market.)

10 Responses to “Average Duration of Unemployment”

  1. Andrew_FL says:

    This could be a number of different things going on. Off the top of my head, if unemployable job seekers become more persistent and less easily discouraged, they will try to find work longer before giving up. Or, the “frictionally” may be experiencing a dramatic decrease in rate of turnover-meaning that the baseline “natural” rate of unemployment is increasingly made up of people who are stuck in unemployment, rather than new unemployed people replacing old.

    • Andrew_FL says:

      The latter is still very bad, obviously, because it means the labor market has apparently become much less dynamic. But it’s not clearly a business cycle problem.

  2. Anonymous says:

    If a significant number of people who want jobs are unable to find them, that’s all the more reason not to force other people to work against their will!

    Workers making computer parts or televisions in India can be paid low wages in part because food produced by slave labor is so cheap. This lowers the cost of the goods they make, and factories unable to compete with their prices close in North America and Europe. Slave labor anywhere threatens real jobs everywhere.
    – Kevin Bales, Disposable People, page 24

    “Bodies wash up routinely on the shores of Malaysia, Thailand, and Cambodia, where they have been tossed overboard,” deBaca said, describing the slavery on fishing boats in the region. “And usually it’s for asking for a fair wage, talking back to the boss, asking to be taken back to the shore.” The demand for shrimp and fish is driving a stinking slave-based industry that spreads beyond Bangladesh throughout Southeast Asia.

    It’s an industry the feeds a global market that stretches into our supermarkets and hammers American shrimp fishermen in the process. Paul Willis is an independent businessman who makes his living fishing for shrimp out of New Orleans. He loves his work, but he doesn’t think he can compete with slave labor. “We are trying to make a living,” he explained, “but because these foreign countries are using cheap labor, slave labor–call it whatever you want–we can’t compete, we just can’t compete.”

    – Kevin Bales, Blood and Earth, pages 120-121

  3. Tel says:

    That’s kind of interesting, Obama had some ways to extend unemployment benefits so that last peak might be artificial, but even ignoring that there’s an upward trend.

    Russ Roberts put forward a theory that the US economy is less flexible and less adaptable than it used to be, but I have never heard him go into fine detail explaining that. You would expect the reverse trend as technology improves (particularly communications, and search engines) that we can go through more potential employment opportunities and more rapidly. Back in 1950 I might have been physically walking from shop to shop knocking on doors, but now everyone is on the web browser and sending emails.

  4. RPLong says:

    I have a conjecture, but it’s not really an economics conjecture.

    There’s this little alcove in the rocks I once hiked to, many years ago. There, in the rocks, many people had carved their names and dates into the stone wall over the years. People have been hiking there for 150 years or more. You see the names and dates in the rocks from the 1800s and early 1900s, and the carvings are impeccable. The letters are straight, carved deep into the stone, as if etched into a tombstone. The more recent carvings – from about the 1960s onward – get progressively more illegible. The carvings from the 90s and beyond look like kindergarten chicken scratch.

    On a superficial level, this points to the decline of stone carving as a hobby. On a deeper level, though, I think it points to a long-standing problem society has. Being an amateur musician, for example, in the 1800s meant learning how to play music from the great composers. Today it means learning how to play The Ramones.

    We all have more leisure time, but we’re making less productive use of it. We have extended periods of unemployment, but we come out of it with nothing to show for it. The unemployed and not-employed aren’t writing symphonies or epic sagas. They’re logging onto Twitter.

    Back to economics: Mises would have predicted that if society had as much technology and easy access to non-employment income as we do today, our wealth would increase dramatically, since a lot of that time previously spent working can now be put to use on higher- and higher-order goods. But, alas, that’s not what happened.

  5. Capt. J Parker says:

    “People in the comments of my previous posts have been telling me I’m crazy for thinking anything is wrong with the labor market.”

    There’s at least three questions worth asking:

    The first is the near term question: If I change policy today what will happen in the labor market in the near term. Will employment increase a lot or not? I think the smart money would be on an analysis that assumes the labor market will behave like full employment for prime age males is around an 86% employment rate. and not a 97% rate. This isn’t an endorsement of the 86% rate being all well and good but it is saying recent labor market data are likely a reasonable guide to near term future behavior of the labor market. I’ll wager $100 the next peak in employment will be below the last peak of 87.7% for prime age males.

    The second question is: Is the long term decline in prime age male labor participation good or bad? Dr. Murphy is telling us that we are crazy to think it is anything other than a bad thing. I don’t think it’s totally clear. Was the increase in female labor participation in the latter half of the 20th century good or bad? Given that female labor participation is much greater than it was in 1958 why wouldn’t that mean that lower male participation is consistent with a robust economy and increasing wealth? Societies with meager subsistence economies have very high labor participation rates.

    The third is: If the long term decline in the prime age male labor participation IS bad, what is to be done? Of course you need to know the reason for the long term decline and this is something that isn’t understood. A gut instinct that 98% of prime age males should eat bread by the sweat of their brows or else evil is afoot may be correct but I would be cautious of using that reasoning as a policy guide.

  6. Harold says:

    All this perhaps explains current populism. These statistics have been blamed on globalisation and immigration.

  7. Ryan Murphy says:

    I believe the correct way of doing this would be to look at the six definitions of unemployment found here without looking at the story they tell. Give weights, a prior, of what you consider meaningful. If we do not allow current narratives to color our opinions (the narratives largely being driven by what the numbers are), I don’t think U3 is very bad definition.

    Then apply the weights that you would use (and commit to going forward) to the actual numbers found here https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Unemployment_measures.svg

    Then look at what story is told by those numbers. Whatever story those numbers tell is the correct story, according to your own evaluation.

    A priori, I would assign very little weight to “average duration of unemployment.”

  8. Kevin Erdmann says:

    I think most of this is due to the extreme extended unemployment insurance policy that was put in effect during the crisis. It’s hilarious that people tried to argue that extended UEI didn’t increase unemployment. It’s so extreme and it’s specific to the duration range that was covered by insurance. Interesting that some of that remains. I think the remaining average is greatly influenced by a small contingent of workers with VERY long durations. I bet the median figure is back to normal.


    Yep. Close. I think most of the remaining drift up is demographic. Older workers tend to have lower UE but longer durations. Again, you can get age specific numbers from HIS, and those will be more stable.

  9. Kevin Erdmann says:

    Not HIS…..BLS.

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