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Nobel Prize in Economics Awarded for Theory on Why Unemployment Remains So High

Allen Jezouit, @BerkshireCountyBusiness
The WSJ reported today that three academic economists have been awarded the Nobel Prize in Economics for their research into the phenomenon of high unemployment even though there is a rise in job openings (Trio Share Economics Prize, WSJ, October 12, 2010). They hypothesized that high unemployment benefits which result in the unemployed spending more time looking is actually better for the economy because it means they find jobs which are a better fit for their skills.
 
Huh? That is probably the most counter-intuitive conclusion I've ever heard in my entire life. One has to wonder if they actually looked at any survey data of unemployed folks. Two data points are not statistically significant, but I know two people who were recently laid off who are eligible to collect the max in MA ($629/week) for something like 70 weeks. Neither have any plans to look for jobs for at least 6 months. One is an avid skier who is going to hit the slopes all winter before starting to look in the spring. The other is relocating to Texas and will start looking once they're settled. Both are looking at their unemployment benefits like an opportunity to take an extended paid vacation.
 
I've been doing some work trying to hire new staff for a local financial services firm. It is amazing to me how difficult it is to find qualified people who actually want to work these days. When people hear they are actually going to have to show some effort in order to earn a decent living (compensation is roughly 50% base, 50% commission with total compensation potential in the $60-$90k range), they are scared away. Part of my role is the initial telephone screening interview. I've had people tell me they've been unemployed for months who hear the job description and say, "Not interested." We had one kid take the job and quit after only 4 days. The employer couldn't be any more candid with people - telling them right up front, "Expect to work 45-50 hours per week, expect to dial the phone 50+ times per day if you are going to be successful." Kid quit after 4 ... FOUR ... days! He's got a finance degree from MCLA, graduated in May'09, and has been working retail part-time as a cashier ever since. What did he think he was going to get for his first finance job? CFO of a F500 company?
 
Don't get me wrong. I know how tough it is to have a job you hate. It sucks. It is so tough to get out of bed in the AM if you hate your job. However, if the alternative was going hungry and homeless, people wouldn't be so picky. As a society, we simply can't afford a system that allows people to be picky. We need a system that allows people to eke by for a few weeks until they can find a full-time job doing something that pays half way decent and a part time job that makes up the difference.
 
Things have changed. Look at home prices. We all wish we could sell our home for what we bought it for, but if you bought a home in 1999-2006, that probably won't happen for years to come. Ditto re: income and lifestyle. If you lost your job during the Great Recession, chances are you will struggle to find a single job that replaces or increases the income. You may need to add a second job in order to approach the same lifestyle. That's just reality.
 
Seems to me, there are jobs out there. It's the effort that's lacking.
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