A real question we still have no answers too but economists have put together some possible theories as to why the country’s unemployment rates are so high. Read them below.
One popular theory for why joblessness has stayed so high — currently at 8.3 percent, with a large portion of people unemployed for more than six months — is a rising amount of what economists call structural unemployment.
That’s the belief that a large number of the people looking for jobs are struggling not because there are not enough jobs available, but rather because they’re the wrong age or don’t have the right education or skills.
Some argue that if these fundamental factors are behind the nation’s weak labor market, there’s little that government can do, at least in the short term, to boost employment. The thinking is that even if a company has enough business, it won’t hire a new worker who’s the wrong age or doesn’t have the appropriate skills.
But a new paper by Edward Lazear, a Stanford professor and former top economic adviser to George W. Bush, and James Spletzer, a top economist at the Census Bureau, concludes that structural unemployment isn’t a problem.
The authors looked at employment levels across industries, age groups, levels of education achievement and other indicators. And in all cases, they found that just as employment declined during the recession, it bounced back with vigor afterward.
They argue that there is “no compelling evidence that there have been changes in the structure of the labor market that are capable of explaining the pattern of persistently high unemployment rates.”
