How Long Will the Unemployment Crisis Last?
It is a point so obvious that it often goes unnoticed. The unemployment rate is very, very high, and has been so for a very long time. Even though it has edged down to 9.5 percent, that is very, very high. Even when it falls to 8.0 percent by 2013, that will be very, very high. And this chart, from Michael Greenstone at the Brookings Institution via Ezra Klein* shows just how long it will take for unemployment to fall to normal rates:
This shows that it should take approximately a decade to close the jobs gap at current rates. I think it will close faster than that, and the unemployment rate will fall faster than that, though not just because the economy will add jobs more quickly. More people will leave the labor force discouraged. More older workers — in particular — will not find work, will give up and will move on to disability and Social Security, often moving from the middle class into less-comfortable lifestyles or poverty as well. This phenomenon has already started, and is most acute among baby-boomers.
- In the interest of full disclosure: Ezra Klein is my unmarried domestic partner, in the romantic phrasing of the census.