Does Ezra Klein know the difference between cyclic and structural unemployment? Consider this:
To see what he means, consider a Michigan construction worker laid off in early 2008. He didn’t lose his job because he was bad at it but because his firm lost access to credit. He hasn’t been able to find another job, because no one is hiring in his area, and he can’t sell his house, because it’s now worth less than what he owes on his mortgage.
Right now, he’s an example of what economists call “cyclical unemployment.” He’s unemployed because of the business cycle. But if his stretch of joblessness lasts for too long, that might change. His skills might deteriorate, and so too might his confidence. He might join an altogether more troubled group: the “structurally unemployed” — the out-of-work who can’t get jobs because they’re not suited for the jobs that employers are offering. The long-term unemployed, Posen warns, can become “de facto unemployable over time.”
If you answer, I can’t tell because there’s not enough information I think that would be a fair response. However, if you say yes, that’s cyclical unemployment, I find that pretty puzzling.
Item 1. Michigan, as the result of an ongoing decline in the U. S. automobile industry, has been growing at a rate slower than nearly any other state in the Union for decades now. The automobile industry’s decline is structural. Hence, declines that follow that decline are structural, too.
Item 2. While you can’t attribute any single job to cyclical or structural unemployment, in what world will we ever return to the frantic level of activity in the construction industry we’ve seen over the last decade (let alone the last 30 years)? There’s a year’s worth of housing inventory right now and sales are flat. Commercial real estate is in at least as big a fix. Certainly there’s got to be some contraction in the construction industry, doesn’t there? That’s structural unemployment.
Does he mean something else by the terminology?