According to Lakshman Achuthan at the Economic Cycle Research Institute, the U.S. unemployment rate has already hit its worst level for the economic downturn, back in October of last year when it was 10.1%.
That’s because February’s unemployment rate came in at 9.7%, a full 0.4% lower than October, which means it is highly unlikely to hit a new peak:
“You have never had a four-tenths-of-a-point decline in the rate and then see it go up to a new peak” since the end of World War II, Achuthan said today in an interview on Bloomberg Radio. “The unemployment rate already peaked.”
Yet why do many Americans feel like things aren’t getting any better? That’s because many of them have been unemployed for far too long already, and they don’t have the skills employers need:
The reason the improvement does not “ring true” is that long-term unemployment remains high, Achuthan said. The skills of many unemployed Americans do not match the current demands of the workplace, he said.
The long-term unemployed accounts for 40% of the unemployed according to ECRI, and will be feeling economic pain well after the rest of the U.S. recovers. That’s because many of them don’t have the skills companies need today, thus they can’t simply wait for an economic rebound. The U.S. economy will grow, and new jobs will be created, but they won’t necessarily be the same jobs as before. Thus the unemployed fall into two distinct camps.
“The part you don’t see is that 60 per cent of the unemployed, people who are shorter-duration unemployment, people who lost their job then in another month or two get another job, they’re seeing the jobless rate fall faster than the other two recoveries,” Achuthan said.
The reason they are able to find work is “beyond just education,” he said. “Their skill sets fit what people want right now and the ones that are long-term unemployed are mismatched. They could be people who were associated with the bubbles, housing and credit, or they could be in manufacturing.”
We can’t hammer it in enough — the days are numbered for anyone who thinks they can do lower-skilled work in America or Europe while earning more money than higher-skilled people in developing countries. Everyone has to constantly upgrade themselves as a matter of habit if they want to enjoy a standard of living in the highest bracket.