At the Economix blog on Thursday, Catherine Rampell posted a must-read analysis of the composition of the unemployed population. But I think her conclusion is too pessimistic. She writes:
Whatever the underlying cause, the result is disconcerting: compared with previous recessions, many more of the employment gains in this recovery will have to come from new jobs.
That is much easier said than done.
Workers whose entire occupations — not just the previous payroll positions they held — are disappearing (think: auto workers) will need to start over and find a new career path. But the new skills they will need take a long time to acquire.
Even if the employment gains in this recovery will have to come from new jobs, it is not necessarily the workers whose entire occupations are disappearing that will have to fill the new jobs in emerging fields. <!--break-->There is far more substitutability among workers than that. These displaced workers may keep their current skill set and put downward pressure on the wages of all workers with those skill sets in all industries -- not just the ones that are shrinking. That downward pressure on wages will in turn cause the workers for whom retraining presents the smallest obstacles or the largest potential benefits to seek the new skill sets. While the displaced workers may be older, given the industries that are declining, those with the most to gain from retraining will be younger, since they have more years to reap the labor market benefits of new skills. The jobs we should expect the newly unemployed to fill are those vacated by the workers who do get retrained.