Nine months ago he lost his job as the security manager for the western United States for a Fortune 500 company, overseeing a budget of $1.2 million and earning about $70,000 a year. Now he is grateful for the $12 an hour he makes in what is known in unemployment circles as a “survival job” at a friend’s janitorial services company. But that does not make the work any easier.
People have always been talking about the "real" unemployment rate in our society, going back to the early jobless recovery years of the Bush administration. A lot of talk about "hamburger flipper" jobs instead of actual well-paying jobs in the economy.
Tyler Cowen recently commented about underemployment as well, wondering whether if "unemployment" was still a good measure of a recession.
Tyler does appear to be right. When a society has a lot of different workers with different skill-sets, underemployment becomes a lot more "real" than a society where everyone is a front-line factory worker. And we supposedly have a lot of different skill-sets today. That's part of the reason over Robert Reich's concerns that stimulus money not go entirely to white construction workers.
However, I wonder how "heterogeneous" our labor supply actually is. I'll take a comment from an internet forum I frequent:
I think it's generally understood that college teaches you very little real world skill. Recruiters hire you out of college because you're young and you've proven you can accomplish something but not because you actually know what you're doing.
I remember when my ex girlfriend was completing her MBA and we ended up at the local bar with the recruiter for IBM. He said no companies he knows hires PHD's anymore only graduate students. Primarily because PHD's will analyze a problem way past the point where action against it is even relevant. They wanted smart people who can act.
He understood that people right out of college really have their heads up their asses. No real world experience. But they wanted young people with energy, people who at the very least, proved they can accomplish something difficult. That's what your degree is worth. Getting a good job afterwards relies on your charisma.
I didn't agree with everything, but there is anecdotal evidence that a lot of people end up in jobs that they didn't study for in college at all. Obviously, this isn't as big of a concern for "specialized" majors like engineering, but a lot of the education system is supposed to provide a more generalized knowledge that builds up your "transferrable skills." Basically, it teaches how you to do any job well, but not enough specific skill to be super-awesome-employee right out of college.
That's hardly heterogeneous!
On the other hand, we are probably more specialized than we were in the post. The investment bankers on Wall Street aren't going to be having too many more finance jobs in the future, since the economy needs to adjust away from finance. The point isn't that we don't face any underemployment, though. It's that I believe a lot of people are underestimating the flexibility of the labor force.
And, secondly, we need to ask ourselves what this is really a function of: are we having more specialized jobs (finance) because our economy is naturally tending towards that direction, or because our regulatory system helps create bubbles that then become the basis of real economic activity.
The second part of Tyler's argument, which is arguably more important, is spot-on. Basically, Tyler is saying that the unemployment measure isn't what it used to be, because these days the labor market is faster and people can fill up any vacant jobs at Target a lot more quickly than we could in the 1960s. This produces a lower measured unemployment rate, but that doesn't mean the recession isn't that bad: it just means that people that are unemployed can find SOME work.