Barack Obama’s Claim That Unemployment Is "Structural": For the Virtual Green Room
Rebutted by Matthew Yglesias:
Obama’s Today Show interview where he appeared to suggest that unemployment is primarily attributable to technological change:
There are some structural issues with our economy where a lot of businesses have learned to be much more efficient with fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller. Or you see it when you go to the airport and you use a kiosk instead of checking at the gate. What we have to do now, and this is what the jobs council is all about, is identifying where the jobs for the future are going to be, how do we make sure that there’s a match between what people are getting trained for and the jobs that exist, how do we make sure that capital is flowing in those places with the greatest opportunity.
Now obviously this is true.... The invention of the answering machine reduced the need for secretaries.... ATMs reduce the need for bank tellers.... And this is, indeed, one reason why people are unemployed. It’s also the source of progress over the long term. But technological change is a constant. Firms were seeking to adopt labor-saving technology in 1998 and 2006 and 1967 just as much as they are today in 2011. And yet the unemployment rate was much lower in 1998 and 2006 and 1967 than it is today....
Maybe Barack Obama has some reason to believe that the pace of technological change accelerated in some unaccountable way during his time in office. But... the housing crisis and the problems in the banking sector led to a historically unprecedented drop in personal consumption.... All else being equal, if households spend fewer dollars, then fewer people will be employed in providing them with goods and services. One strategy would be to ensure that all else is not equal and that government spending fills the gap opened up by the collapse in private spending. But that hasn’t happened. Federal spending has continued roughly at trend levels, and state/local spending has also fallen below trend. The result is mass unemployment.