So one reason to think that this recession is not structural, at least in the way that some people have argued is to look at state-by-state performance. That why you pick up not only the big industry effects but the multiplier effects from that industry.
Here is private sector employment in Michigan over the last 20 years or so
The thing to note is that what happened to Michigan happened in the late 1990s and has been trending ever since. If anything this recovery is a reversal of that. This is important because Michigan is an obvious manufacturing and “old” economy state.
You could actually make an argument that some of the structural problem is that the economy was realigning so that people were moving from Michigan to Nevada and then whoops Michigan recovered and so now who wants to live in Nevada. Thus Nevada is stuck in rut monetary policy can’t fix. Though I think that is not the strongest of stories.
Ohio shows a similar pattern
As does Indiana though less pronounced
Contrast this to the Sun States
Florida
or Nevada
or Arizona
Yet, can you really with a straight face tell me that millions of Baby Boomers are set to retire and so I should expect a structural drop in the demand for labor in Florida, Arizona and Nevada?
Now obviously these states had big housing booms and I have had people tell me there are too many homes in Nevada. Maybe, but here is non-wage personal income growth in Nevada
That’s income from Social Security, dividends, rent, small business ownership etc.
The hump is likely from construction contractors who are often small businesses, but the underlying trend is straight up. Income is still pouring into Nevada from other states at roughly the same rate.
Tourism is down for sure and that hurts, but the retirees by this measure look like they are doing alright.
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Friday ~ April 20th, 2012 at 4:27 pm
curtd59
People can move themselves and their skills.
But they cant change their skills.
If people lack desire to sell their labor at market prices, and they lack the ability to develop skills that can be sold at market prices, then unemployment is structural. Human capital is not infinitely fungible, and in many ways is a perishable.
I feel like you want to define structural in order to evade this issue. Because if this statement is correct, then demand will not solve the issue only move it further out in time.
Friday ~ April 20th, 2012 at 6:21 pm
rjsigmund
the biggest employer in cleveland for the last dozen years has been cleveland clinic; university hospitals is #2…hospitals are big in pittsburg too…serving all those retired union workers with cadillac healthcare plans…
Saturday ~ April 21st, 2012 at 1:46 pm
lucabrasi
When Millions of Baby Boomer retire, many probably will retire to Sunny States. That is partially good news for the Sun Belt. More immigration is a good thing. However, senior citizens tend to make much higher demands on government services. So while FL, AZ and NV should expect to see increases in overall employment, they will soon have to address the general lower level of government services that Sun Belt states tend to offer when compared to Rust Belt States. In other words, immigration of Senior Citizens cuts both ways. As the percentage of Seniors increase when compared to the rest of the population, the governments will have to pay for a significantly higher level of services.
Where I live, near Pittsburgh, the number of Senior Citizens as a percentage of the population is about to drop significantly. Why? Well, the 80-81 recession led to a complete disruption of the baby boomer demographic around these parts. Tens of thousands of middle aged workers spent the years from 1982 to 2000 moving places like FL, AZ and NV. This left the region with a high percentage of Seniors and very few (relatively) baby boomers and later generations (Generation X, Generation Y, etc). The Seniors that now remain in Pittsburgh will soon be (forgive the harsh terminology) dying off– as senior citizens tend to do. With a relatively small baby boomer population around these parts, the demographics around here are reversed from what FL, AZ and NV should expect.
Sunday ~ April 22nd, 2012 at 7:55 am
Sunday links: real expertise | Abnormal Returns
[...] How the recession affected states differently. (Modeled Behavior) [...]
Sunday ~ April 22nd, 2012 at 12:32 pm
Econbrowser: The geography of unemployment
[...] unemployment rates by state (in red) with the maximum achieved during the recession (in blue). Karl Smith comments on some related [...]
Monday ~ April 23rd, 2012 at 10:45 am
The geography of unemployment | Bear Market Investments
[...] unemployment rates by state (in red) with the maximum achieved during the recession (in blue). Karl Smith comments on some related [...]
Saturday ~ April 28th, 2012 at 5:36 pm
Joshua C.
Your “Arizona” graph is of Arkansas. Arizona is “AZ” but “AR” is Arkansas.