Wei Min

The United States is being plagued by unemployment. Particularly since the financial crisis, high unemployment has become one of the most pressing social problems in the country. In the current election year, it will also be one of the key factors that decide the result of the general election in November. Statistics from U.S. Department of Labor show that the country has created 69,000 more jobs this May, far lower than the expected figure of 150,000. The depressing jobs report triggered fresh anxiety for U.S. economic prospect. If the trouble of the U.S. debt issue is temporarily avoidable, the problem of unemployment is much more urgent for Washington policymakers. Paul Krugman, winner of the Nobel Prize in economics, warned recently that unemployment is now the biggest threat to the U.S. economy.

Noticeable features

FOR JOBS: Thousands of U.S. citizens protest unemployment in New York City on October 10, 2011 during the Occupy Wall Street movement (SHEN HONG)

Despite ongoing debate over the nature of U.S. unemployment, people are more inclined to believe that it is rooted in structural causes.

Although Ben Bernanke, Chairman of the U.S. Federal Reserve Board (FRB), defended his quantitative easing economic policy and repeatedly claimed the current U.S. unemployment is cyclical, his view was not unanimous among his colleagues at FRB. Jeffrey Lacker, President of the Federal Reserve Bank of Richmond (FRBR), said in May that the major factor affecting the U.S. job market is structural problems such as the lack of skilled professionals. President of the Federal Reserve Bank of Philadelphia Charles Plosser agrees that the current unemployment is mainly due to structural causes, suggesting that monetary stimulus measures by the FRB are of little use.

While the U.S. economy has kept a steadily low rate of growth since the second half of 2009, unemployment has stayed high. In 2011, the U.S. economy grew by 1.7 percent, down by 1.3 percentage points compared to that in 2010, while the unemployment rate in 2010 and 2011 was 9.65 percent and 8.95 percent respectively. Thus, the most important challenge facing the United States is no longer economic growth, but unemployment. The "jobless recovery" has become a major challenge for the U.S. economy.

The average duration of unemployment in previous economic recessions has never exceeded 26 weeks. However, since September 2009, data have shown that the average unemployment period of 45 percent of the unemployed has exceeded 27 weeks, the highest level since the end of World War II, and another sign of structural unemployment.

Since the slight recovery of the U.S. economy in June 2009, the job vacancy rate has risen 35 percent, while unemployment still remained obstinately high. Reports from Deloitte Consulting and National Association of Manufacturers in 2011 said that U.S. manufacturers are short of 600,000 needed technicians. Large numbers of job vacancies exist in health care and the IT industry without enough competent applicants.

While the service industry has seen a strong recovery in employment, employment in manufacturing and construction industries remains low. The employment in different industries is in line with the trend of U.S. industrial structure adjustment, which reflected a structural unemployment in the U.S. job market.

Major structural causes

The U.S. structural unemployment is directly related to the transformation of the U.S. economy, but it worsened in the current recession, when the United States lost 8.8 million jobs, about 42 percent of which have since been resumed.

De-industrialization of the real economy brought substantial job losses. From 1980 to 2009, the number of employed people in U.S. manufacturing dropped to 11.88 million from 20.29 million due to technical advancement and industry contraction.

Under the backdrop of globalization, the outsourcing of the country's manufacturing industry and low-end services, which require high labor costs, has sent many U.S. job opportunities overseas. Statistics from the U.S. Department of Commerce show that in the first decade in the 21st century, top U.S. companies reduced 2.9 million jobs in the United States, while employing 2.4 million overseas.