The Beveridge Curve is a means of depicting the relationship between the unemployment rate and the number of jobs available in an economy. An example of this curve is given by a Federal Reserve Bank of Cleveland article, which asks “Has the Beveridge Curve Shifted?” and is presented below.
Moves along the curve indicate increasing job openings in a growing economy associated with decreasing unemployed workers, or decreasing openings with increasing unemployment in a shrinking economy. The curve itself can move, also, as structural mismatches between employers’ needs and employees’ capabilities change. Such mismatches can be driven by technology that creates a gap between skills needed and skills possessed, or job location vs employee location—or by long-term unemployment, which destroys existing job skills that otherwise would be a good match for existing skill needs.
But in such cases, we’d expect the curve to shift back as such mismatches clear (and shift again, as new mismatches develop). It’s normal for economies to expand and contract on a shorter time frame, though, than that on which structural shifts occur—it can take months or years to retrain, for instance, whereas an economy can contract in a matter of months (typically, in the US, the current dislocation, or those of the 1970s or 1930s notwithstanding). In fact, the Fed’s article points out that such movements of the curve itself are normal behaviors for our economy in the post-war period.
That’s a long-winded entry into the purpose of this post. There are two graphs that indicate the failure of the present administration’s economic policies, especially as those policies impact employment capabilities in our economy; both of these are from Sober Look. The first graph is this one:
This shows just the sort of structural shift described above, and the shift didn’t occur until after the recession was over—and recall that the recession ended in Spring 2009, before any economic policies of Democratic Presidential Candidate Barack Obama could have taken effect. Even his $800 billion Stimulus Act spending had not had time to have any effect at the time of the recession’s official end.
Notice that the pre-recession unemployment vs job openings part of the curve is entirely consistent with what we’d expect in a healthy economy—lots (relatively) of openings and full employment, with fewer openings associated with moderately higher unemployment. During the recession, the decreasing availability of jobs and increasing unemployment followed that curve all the way out to the peak unemployment near 10%.
After the recession, though, and since—a period in which Obama’s economic policies have been able to have their full effect—we see the curve’s shift: even though jobs are becoming more available, unemployment is remaining high, and the drop-off in unemployment, such as it is, is following a higher level of jobs availability—there is a higher mismatch between jobs and job seekers.
This next graph illustrates a major reason why.
This graph shows the number of Americans who’ve been out of work for 27 weeks (6+ months) or more as a per cent of total unemployed.
Notice that sharp, and so far sustained, rise in this long-term unemployment during Obama’s term. This long-term unemployment produces one of those mismatches described above—the skills mismatch, this time driven by skills destruction through non-use from that long-term unemployment. Obama’s policies are actively suppressing re-employment. Even as the preceding graph implies that there are more jobs available now than at the start of his term, job seekers can only find jobs from an increased amount of availability than was the case before the present policies were in place. The increase in jobs available just isn’t enough to absorb our high unemployment.