A Question of Wage Growth
The issue of structural unemployment may be with us for some time -- and may be extremely difficult for policymakers to resolve. Researchers from the New York Fed have determined that about one-third of the rise in unemployment to 10% at its peak from 4.6% prior to the recession is due to mismatches stemming from unemployed persons' occupation and industry (or companies being extremely picky).
That 1.8 percentage point increase translates into a "natural" rate of unemployment of about 6.5% compared with the 4.5% to 5% that economists have historically believed it to be. In a glass half-full version, that means stronger demand -- or lessened uncertainty in the minds of employers about policy decisions -- can pull down unemployment. In a glass half-empty version, a segment of the population, unfortunately, is going to have a very difficult time regaining employment without significant retraining....477 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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