Structural Change and Employment

Current Issues
I N E C O N O M I C S A N D F I N A N C E
Volume 9, Number 8 August 2003
FEDERAL RESERVE BANK OF NEW YORK
Has Structural Change Contributed to a Jobless Recovery?
Erica L. Groshen and Simon Potter

Groshen and Potter provide compelling evidence that Job Recovery after the last Recession, as in the 1991-2 Recession, was because of Structural Job elimination rather than Temporary Layoffs--normal trends of previous Recession. Their hypothesis states the later Recessions removed Jobs, and followup re-employment required new Job creation--always a much slower process as Business operations must be reformulated, Capitalized, and Labor trained in the new Production profile. They do not directly postulate Corporate search for lower Production Costs through Offshoring was responsible for the Job destruction, though it is seemingly obvious.

Their work holds certitude with the statistical evidence and Graphs provided. This Author needs some good Numbers-crunching Economists to examine what impact Job destruction has upon National Savings, due to the erosion of individual Savings potential of Labor elements. This would include not only loss of paid Worktime by unemployment, but also retraining costs endured by Labor elements in acclimation to new Work procedures. lgl