Slack labor market?

We still have an unemployment rate that is much higher than we’d like, says host Mary Walden. It is nowhere near the 4.5 percent jobless rate we had prior to the recession. Still, the rate has come down substantially from the highs of four years ago. She asks her husband, N.C. State University economist Mike Walden, “Do economists think we could see further drops?”

Mike Walden: “This is always an important question, and unfortunately many economists see big problems in the country getting down to an unemployment rate anywhere near 5 percent. The problem is the increasing number of unemployed folks who simply don’t have the skills that businesses want, and if they do get jobs they’re only for a short period of time.  We see that even in growing areas like the Triangle the unemployment rate is still much higher than traditionally.  So this is, I think, a problem that’s going to get much more focused. How many of those folks who are unemployed simply have no hopes of getting employed given the skills that they have. Some studies show that up to 60 percent right now of the unemployed really have no chance of getting a long-term job because of their lack of good skills. On the other hand there are some studies that show that percentage much lower, maybe around 25 percent.  Still, whether it’s 25 percent or 60 percent, it’s a big problem. And I do think it’s going to keep us from getting down near that magic 5 percent unemployment rate.”