WSJ: What’s Holding Back Hiring?

Stop worrying about the “jobless recovery.” Start worrying about the recovery-less recovery.

Nearly four years after the recession officially ended, the unemployment rate remains elevated, at 7.5%.

The share of the population that’s working or looking for work is at a 30-year low.

More than 2.5 million fewer Americans are working today than when the recession began.

Such grim statistics have led many economists to ask whether there might be deep, “structural” factors holding back hiring. Various papers have attributed the slow pace of job growth to the weak housing market, the downturn in specific industries and the long-run decline in the share of the population that’s working....

Mr. Chinn and his colleagues find that slow growth accounts for the majority of the continued jobs gap — but not all of it. The U.S. has about 1.2 million fewer jobs than it should based on long-run trends.

The authors are careful not to say the entire gap is due to structural factors — some of it may be due to short-term issues, or to flaws in their economic model — but their findings do suggest the weak recovery alone doesn’t explain the weak job market....

In other words, both new papers suggest, it isn’t unemployment benefits or other specific factors that are holding back hiring. It’s the economy, stupid.
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Link: http://blogs.wsj.com/economics/2013/05/20/whats-holding-back-hiring/