Long Term Unemployment

There’s a good article in the NY Times about long term unemployment and how it is likely to persist for years.

Here’s a chart from the article:

I’ve been arguing here that technological advance is the primary factor underlying this trend, and that it is likely to accelerate. Economists are predicting that it will take years for the job market to recover—but if technology continues to accelerate one has to wonder if it will ever really recover. Perhaps we are at the threshold of a new reality.

As an economist quoted in the article points out:

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

There’s also a shorter article in Yahoo Finance on the unemployment problem.

I think one issue is our fixation on GDP numbers as a way to measure economic growth. A number of economists have pointed out the GDP is really not a good way to measure overall prosperity, and I think this is becoming increasingly true. GDP can continue to grow for some time even as the fruits of that growth are increasingly concentrated in the hands of just a few people. Ultimately, though, I think that will become unsustainable.