The Structural Signature

[phantom power]

the way I usually try to do it is to ask whether the available facts fit the “signature” the story seems to imply — that is, do we see the general pattern that the argument would suggest we’d see?

Now consider the argument that our problems are mainly structural. The way this story is usually told is that we had too many workers in the wrong industries, that we have to expect a depressed level of overall employment as workers are moved out of these “bloated” sectors.

OK, so what should be the signature of that story? Surely it is that job losses should be concentrated in the bloated sectors, that employment should if anything be rising elsewhere — and wages should be rising in the unbloated sectors more rapidly than in the bloated ones.

So, let’s take a quick look at BLS data on employment and wages. Here’s what we get on a first pass:



Kind of looks like job losses everywhere, doesn’t it?

And on wages,



Who’s bidding for workers?

...

So why are these people so sure that it’s structural? I know that it sounds wise and Serious to say that it is, but there is this matter of actual evidence; that evidence is strongly inconsistent with a structural story, and quite consistent with a demand story. That doesn’t settle the case entirely, but in a better world it would go a long way toward resolving the argument.

Too bad we don’t live in that better world.

http://krugman.blogs.nytimes.com/2012/05/08/the-structural-signature/

[phantom power]

1. another chart, broken out in more detail

As Krugman says, "where's the categories showing increasing employemnt?"
(cue Jeopardy theme)