Skills That Don't Pay the Bills II

http://economix.blogs.nytimes.com/2012/12/07/comparing-recessions-and-recoveries-2/

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"Where success is concerned, people are not measured in inches, or pounds, or college degrees, or family background; they are measured by the size of their thinking." (David Schwartz)
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One of the guest commentators at yesterday's "DealBook" (NY Times) business conference in Manhattan was Paul Krugman. I'm always interested in what he has to say so I listened in. Aside from the usual issues about the "fiscal cliff," China, etc., Krugman mentioned Adam Davidson's commentary in the New York Times Magazine on the hue and cry about "skilled jobs."

As I quoted Davidson in my prior post:

"Deep Thoughts"
(1) There is no skills gap.
(2) Who wants to operate a highly sophisticated machine for $10 per hour?
(3) Not a lot of people.
(4) As a result, there is going to be a skills gap.

Krugman's point was that, of course, there's going to be a "skills gap" if you're going to pay $10 per hour for skilled people. Krugman pointed out yesterday, as he did in his column last week, that "...there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now - except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused."

Krugman is much more concerned about "mass unemployment." While he accepts that there has been some progress on this issue over the past year, he points out that long-term unemployment remains at levels not see since the Great Depression: "...as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year."

I keep track of the overall unemployment picture by following Catherine Rampell's recession trend lines (see her post attached): Job Changes in Recent Recessions/Recoveries, as a Share of Employment at Previous Peak. That's a long title but a picture is worth a thousand words as the old saying says. Her color trend lines depicting the 5 previous recessions/recoveries versus the recession that initiated in 2007 make it easy to see where we "aren't." As she points out, for the 26th straight month, the country has added jobs: 146,000 nonfarm payroll jobs in November but employment still has a long way to go before returning to pre-recession levels: "Getting the economy to 5% unemployment within two years - a return to the rate that prevailed when the recession began - would require job growth of closer to 270,000 per month."

Rampell goes on to point out: "There are now 12 million workers looking for work who cannot find it. The tally of those who are "underemployed" - that is, adding in those workers who are part time but want to be employed full time, and workers who want to work but are not looking - is an even larger 22.7 million."

While Rampell's 2007-present trend line is headed back up toward where it started, if you project the "slope" of it, just by "eye," (and, of course, I'm going off her chart) my guess is that it doesn't return to its start point until 2014 to 2017.

Maybe this is one of the reasons why the Fed has announced that it plans to hold short-term interest rates near zero as long as the unemployment rate remains above 6.5%.