The current unemployment rate is still at 9% and many economists claim that the Great Recession may have profoundly altered our job market. Furthermore, many economists believe that a return to the 5 percent unemployment rate we previously had, that is also described as “full employment”, may never be possible again. According to an article in The Fiscal Times, the reason for this altered job market is that unemployed workers are not finding the jobs they need as smoothly and easily as in past recovery times. There is a large gap between the skills that companies need and the skills job seekers have, so finding positions for the unemployed has become more difficult.
According to the Fiscal Times, “job openings during this recovery have grown four times faster than new hires.” Economist Michael Gapen at Barclays Capital was quoted saying, “That job openings are outpacing hires tells us that labor market frictions are keeping the rate of job finding subdued.” The number of jobs created may increase over the months, but the number of hires has increased only slightly.
Another thing working against the unemployed is the length of jobless benefits. According to the article, Congress might extend the 99 weeks that the unemployed have to collect unemployment. This extension in receiving unemployment benefits may lower the amount of people that are actually searching for a job. If someone can collect unemployment benefits rather than working at a job they hate or don’t want to take, then the chances of that someone putting in full effort to look for a new job are somewhat slim. To build on that idea, the longer workers stay out of work, the higher the chances of them losing their skills are. Before, the rate that was considered “full employment” for the country was a 5 percent unemployment rate. Now, economists are saying that they believe that a 7-7.5 percent unemployment rate is considered “full employment.” According to the article, “programs aimed at retraining and education are one key to putting more people to work. The problem is, in coming years Washington may not have the fiscal resources to commit to those types of efforts.”