Is Higher Unemployment the Real Norm?
Economists debate – endlessly, it would appear – the notion of unemployment and what rate is to be considered “normal.” While most sane observers would suggest that “normal” is a word best left to discussions of other things (outside the context of the current U.S. and world economies), the conversation is still worth having.
During the “bubble years” as they’re now affectionately (or derisively) known, economists often suggested that unemployment hovering around 5.5% was normal. And perhaps it was in that context. But it bears repeating that that “context” was decidedly abnormal. Those processing loan requests, building houses, selling mortgages, etc. during the bubble years were employed by a phenomenon that was created by the easy money policies of the Federal Reserve.
Unfortunately, fake economic booms can’t last forever, so everyone tied to the bubble that was created and then exacerbated by Alan Greenspan and Ben Bernanke, respectively, had to lose their jobs at some point. Now, the questions are – do those formerly employed folks possess the skills to compete in the modern employment market (sans all those fake jobs) and what is the new “normal” as it pertains to the unemployment rate.
Of course, that latter question simply begs another, i.e. – even though the U.S. government, via the Bureau of Labor Statistics, reports unemployment in the 8-9% range, the methodology used to arrive at that number is, in itself, flawed. The percentage of people out there who don’t have jobs (but want them) is over 15% at present, but that number is simply too ugly for politicians, so it’s largely ignored by those politicians, as well as the media and the masses.
At the end of the day, however, it might just be that 8.5% unemployment is the new normal. Or, if you’re a stickler for accuracy far beyond those at BLS, 15-16% is the new normal as it pertains to the true jobless rate.