Tuesday, September 22, 2009
Pimco's Tony Crescenzi: only innovation can create jobs lost due to the structural changes in the US economy
Structural rather than cyclical influences on unemployment are running well above normal during the current recession, as is highlighted by the percentage of the unemployed that are “not on temporary layoff.” Data from the Bureau of Labor Statistics show that 53.9% of the unemployed were not on temporary layoff in August, up from 39.1% a year earlier and well above the 30-year average of about 34%. The current level is well above the peak of previous cycles, which tended to move above 40% and was as high as 44.9% in May 1992. Many job losses are occurring in industries with broken business models and jobs won’t return quickly. This will put downward pressure on wages ...In terms of numbers of people, data from the BLS show that 8.1 million people were characterized as "not on temporary layoff" in August, up from 7.880 million in July and 3.72 million a year earlier. The not-seasonally-adjusted figure for "Permanent" job losers totaled 6.406 million, up from 3.609 million. These figures represent a very large proportion of the roughly 7 million decline in nonfarm payrolls (the tally on payrolls is produced via a survey of business; the figures on unemployment and both the "not on temporary layoff" and "permanent" job losers categories are derived from the survey of households).