Let's Review the Historical Record
From a comment by Publius on this CD post: "At a Joint Economic Committee hearing on Friday, Keith Hall, Commissioner of the Bureau of Labor Statistics suggested that median unemployment duration has declined simply because more people have lost their jobs recently, and therefore a large number have only been receiving unemployment payments for a few weeks, driving the average time of unemployment down."That may or may not be true, but we do know for sure that in each of the last six recessions, median duration of unemployment went UP, not down (see chart above, click to enlarge).
2 Comments:
That is a good question: it seems logical that in an economic downturn a flood of the recently unemployed should drive down the overall average. So, why doesn't it?
Taking the conclusion that the average goes up and then drawing a hypothesis: perhaps it is because those recently laid off tend to be the most qualified (afterall, they were employed while the others making up the average were not). As such, when they lose their jobs due to the downturn they are the first to get whatever jobs do become available, jobs which during normal economic times were forced to settle for less qualified workers.
As such, the flow of new jobs during normal economic conditions serves to keep average unemployment duration down by settling for less qualified workers due to the difficulty of finding qualified workers. However, in hard times this flow of new jobs serves to keep the average high by sucking up only the recently unemployed.
Past Performance is Not Necessarily Indicative of Future Results.
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