In the US, the past three years have seen employment fall from 137.8 million people in July 2007 to slightly less than 130 million in July this year — a decline of 7.9 million during a period in which the adult population grew by 6 million. What we have witnessed is not a shift in demand into sectors lacking an adequate number of qualified and productive workers, but rather a collapse in the level of aggregate demand.
This may well look like structural unemployment in three years. In three years, we may well see labor shortages, rising wages and increasing prices in expanding sectors, accompanied by high unemployment elsewhere in the economy.
However, that is not our problem now. Sufficient unto the day is the evil thereof.
J. Bradford DeLong, a former US assistant secretary of the Treasury, is a professor of economics at the University of California at Berkeley and a research associate at the National Bureau for Economic Research.
Copyright: Project Syndicate
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