To reduce unemployment, the economy must create enough new jobs to absorb entrants into the labor market and the existing out-of-work. [Heidi] Shierholz has calculated how many jobs would be needed to lower unemployment (9.1 percent in August) to 5 percent over five years. Her estimate: 16.9 million. That’s an average of 282,000 jobs a month. The trouble is that this rate of job creation far exceeds the present level (105,000 a month since early 2010) or even the level (240,000) achieved during the boom between 1993 and 2000.
You can tinker with Shierholz’s assumptions, but the main conclusion doesn’t change. Even with rapid job growth, unemployment will descend slowly. With sluggish growth — or another recession — it may remain high indefinitely. There are no quick fixes. Unemployment will increasingly define our economic prospects and politics.
It’s not only the jobless who will be affected. No one has yet repealed the law of supply and demand.