Map Of The Day: Here's Where The labour Market Will Be Ugly For A Long Time

In Ben Bernanke’s speech this morning, he touched on this whole question of whether unemployment is structural or cyclical, and in doing so cited this IMF report (.pdf), where the authors attempted to create a structural unemployment index by state.

(Structural unemployment suggests that the weak labour market is the result of a skills mismatch, and not merely a lack of hiring due to weak end demand.)

Here’s what the author’s say:

We construct an index for skill mismatches across the 50 states and the District of Columbia. The index captures how shrinking industries contribute to the swelling of a particular skill set among the unemployed, which may not necessarily be absorbed by expanding industries. The skill-mismatch index (SMI), following Peters (2000), measures the disparity between demand and supply at each skill level (according to educational attainment) in a state, with higher readings indicating greater mismatches.

Skill mismatches have risen sharply during this recession, with considerable heterogeneity across states (Figures 1 and 2). Mismatches are now near or at peak historical levels in numerous states, mostly the ones with a large manufacturing sector. States that had specific characteristics (e.g., Delaware—a financial hub; Hawaii—highly reliant on tourism; and Michigan—an auto hub) experienced disproportionate increases in skill mismatches.

And here’s how it looks on a state-by-state basis. Note that the dark green states are in the worst shape.


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