Thursday, June 7, 2012

Unemployment Is Not The Result Of A Shortage Of Skilled Labor

This study by the Chicago Federal Reserve shows that the unemployment rates for jobs requiring different levels of skill are very similar compared to pre-recession rates.  If unemployment were due to an inadequate supply of skilled labor, we would not expect a similar pattern of unemployment across all skill levels.  There was a slight difference only within the medium skill level.

The high unemployment rate for recent college graduates, was not a part of this study, but it also suggests that there are a large number of highly skilled, and relatively inexpensive, college graduates who are unable to find jobs.  Many of the jobs that recent graduates have taken do not require a college degree.  With rare exceptions, there does not seem to be excess demand for highly skilled labor. Unemployment is primarily due to low demand for labor.

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