Tuesday, July 12, 2011

Government Sponsored Structural Unemployment?

If one reads the Richmond Federal Reserve essay The Rise in Long-Term Unemployment, Potential Causes and Implications (see link below) and peruses Table 1: Demographic Differences in Unemployment, the following observations are apparent:

(a) educational attainment clearly yields different average unemployment rates. Higher education levels yield lower unemployment rates,

(b) the unemployment rate in the construction sector exceeds 10%. (1)

Unemployment by Industry

By industry, construction has the highest unemployment rate. The unemployment rate in construction is 10.3% and the share, of which, that is long term unemployment is 42.8%.

Educational Needs by Industry

The construction sector educational attainment/needs are exactly what dynamic? Could not find a U.S. breakdown however found this breakdown: Employment Snapshot - Construction, New Zealand Department of Labour. (2) One can see from the New Zealand report that educational attainment/needs in the construction industry is heavily weighted to unskilled labor.

Government Sponsored Structural Unemployment?

If you make the assumption that the construction sector requires many low skilled workers for much of its needs, and you factor in a government induced residential/commercial construction bubble, then was a group of workers [some subset] then induced to skip skill enhancements [vocational school, etc.] to enter a low skill occupation? That is, why absorb the cost of skill enhancement when a relatively high paying job awaits requiring low skills?

Government Failure

Considering the above proposition, and now that politicos point to structural unemployment and the need for government sponsored retraining, is the politico argument in essence a sub-government failure of the the original government failure: government sponsored cheap money bubble along with government induced social engineering schemes related to mortgage attainment leading to construction bubble resulting in structural unemployment? (3)

Stated alternatively, that a rise in structural unemployment, to some extent, is related to other politico failures through the mechanism of government. And, on queue, the fix to the politico failure is another politico program [government sponsored retraining].


(1) http://www.richmondfed.org/publications/research/annual_report/2010/pdf/article.pdf

(2) http://www.dol.govt.nz/services/LMI/tools/skillsinsight/snapshots/construction/index.asp

(3) http://www.answers.com/topic/structural-unemployment

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