Part 1 - Summary of the article

The one of the worst recessions in generation caused 13 millions people to be unemployed in
U.S. However, there are approximately 3 million jobs that employers recruiting which so far have not
been fulfilled. This is not sign of good news; this is one of the serious factors of big mismatch between
workers and employers. People mostly fired out of shrinking sectors such as construction, finance, and
retail lack the skills and training for openings in growing fields including education, accounting, health
care, and government. Even if the economy will expand the gap between workers and employers will
remain the same or even grow because of lack qualifications. This is caused structural shift in the U.S.
economy. Another factor is the bust in the housing market which reduces people’s mobility and keeps
them frozen in one place. Chief Economist of JP Morgan Chase says: "It's been a pretty damaging
recession. A lot of relatively skilled full-time workers are losing jobs that are just not going to be there
again. There is likely to be an unusually large skills mismatch." There are still unfilled jobs available even
if the unemployment rate grew from 4.1 to 8.1 % in the same year. "It's really easy to find people that are
50% of what you are looking for," says Jim Spohrer, director of university programs at IBM. "It's really
hard to find people that are 90% of what you are looking for. This is a real dilemma." The White House is
using $3.5 billion of the stimulus for training to figure out the lack of qualification.

Part 2 - Relationship of the article to macroeconomic concepts

As we know macroeconomics studies aggregate behavior of entire economy, deals with problems
like inflation and unemployment rate. Therefore this article about unemployment in the U.S. is directly
related to macroeconomics’ topic. There are three types of unemployment: frictional unemployment,
structural unemployment and cyclical unemployment. Nowadays economy of U.S. faces with all three
types of unemployment but mostly they face with the structural unemployment. This is caused by the
changing structure of an economy. As America’s manufacturing sector shrinks and its education and
health care sectors grown, those whose skills lie in manufacturing become structurally unemployed.
Today, however, with the collapse of house prices, more and more Americans find themselves stuck with
a house they can’t sell in a part of the country where they can’t find a job. America is facing the perfect
storm of unemployment. At the same time that the economy is undergoing its most significant structural
change since the Industrial Revolution brought millions of American workers from the farm fields into
factories, it is facing the most significant decline in private sector spending (consumption, investment and
exports) since the great depression. Put this together with the relative immobility of the American worker
caused by the housing crisis, and unemployment has climbed to its highest level in three decades.

Article
Help Wanted: Why That Sign's Bad
The nation has 3 million jobs going begging. And without
retraining, U.S. workers may not be able to fill them
April 30, 2009, 5:00PM EST, By Peter Coy - BusinessWeek's Economics editor.
Surprising statistic: In the midst of the worst recession in a generation or more, with 13
million people unemployed, there are approximately 3 million jobs that employers are actively
recruiting for but so far have been unable to fill. That's more job openings than the entire
population of Mississippi.

Sound like good news? It's not. Instead, it's evidence of an emerging structural shift in the
U.S. economy that has created serious mismatches between workers and employers. People
thrown out of shrinking sectors such as construction, finance, and retail lack the skills and
training for openings in growing fields including education, accounting, health care, and
government. At the same time, the worst housing bust in decades has left the unemployed frozen
in place. They can't move to get work because they can't sell their homes.

As bad as it is now, the mismatch will create bigger problems when the economy begins
to expand again. First, the unemployment rate is likely to remain distressingly high because
many people who want jobs will lack the appropriate qualifications. Second, inflation could pick
up sooner than expected if employers are forced into bidding wars to recruit the few people who
are qualified for the work. Third, if unemployment stays high it will put additional political
pressure on Congress and the Obama Administration to push through fixes that could make
matters worse in the long run, such as insulating workers from the cost of long-term
unemployment to the point where they lose their appetite for work.

HARSH NEW REALITIES

The danger is that the U.S. labor market will become less flexible at the very time that
Europe's labor market is finally loosening up. To avoid that situation, both employers and
governments will have to step up retraining. Meanwhile, workers and employers will have to
accept harsh new realities: lower pay for workers starting new careers, and imperfect fits for
employers filling vacancies.

All in all, not a pleasant prospect. Says JPMorgan Chase (JPM) Chief Economist Bruce
Kasman: "It's been a pretty damaging recession. A lot of relatively skilled full-time workers are
losing jobs that are just not going to be there again. There is likely to be an unusually large skills
mismatch."

The U.S. economy has changed dramatically over the past couple of years—faster, it
seems, than the workforce can adapt. The evidence is clear in an underappreciated report from
the Bureau of Labor Statistics known as JOLTS, for Job Openings & Labor Turnover Survey,
which has been issued monthly since December 2000. It contains a statistic called the job
openings rate, which is the percentage of all jobs in the U.S. that are unfilled. An employer must
be actively recruiting on the outside for an opening to be counted. On the last business day of
February, 2.2% of all jobs in the U.S. were open—3 million altogether. That figure is
corroborated by the Conference Board's report of 3.2 million online advertised vacancies as of
March.

True, dislocation occurs in every recession (although not on quite this scale). True, too,
the surplus of unfilled jobs is smaller now than it was at the beginning of the recession,
according to both the Bureau of Labor Statistics and the Conference Board. At 2.2%, the JOLTS
rate is down from 3% in February 2008. But some decline is to be expected. The surprise is how
many unfilled jobs there still are given that, in the same year, the unemployment rate shot up
from 4.8% to 8.1%.

Just as the unemployment rate measures problems in the labor market from the workers'
perspective, the job openings rate measures the difficulty that employers have filling slots. While
economists usually focus on the unemployment rate, in many ways the job openings rate is just
as important.

To get a complete picture of the labor market, BusinessWeek constructed a new measure
that we call the "jobs misery index." It is simply the sum of the unemployment rate and the jobs
openings rate. This sum was stable at around 8% for years, including during the 2001 recession.
But starting last spring it began a steep ascent to more than 10%. The question is whether it will
return to the 8% range when the economy recovers or stay high for years to come.

One reason the jobs misery index is so high: The housing bust has reduced Americans'
mobility. The Census Bureau reported on Apr. 22 that the percentage of the population that
moved was the lowest since recordkeeping began in 1948. Home-owners, the Census found,
were only one-fifth as likely to move as renters. The upshot is pockets of persistently severe
unemployment—coincident with places such as North Dakota, where the 4.2% jobless rate is the
nation's lowest. Sykes Enterprises (SYKE) plans to close a 200-person call center in Minot,
N.D., on May 10 for lack of workers, and fast-food restaurants there are putting workers on
overtime to cover shifts.

Immobility is sometimes a matter of choice. Dean Drako, the CEO of security and
network appliance company Barracuda Networks, has been hunting for months for a vice-
president of worldwide sales, as well as other key positions. Out of desperation he gave up a
Friday night with his family in April to attend a mixer heavy on Ivy Leaguers at San Francisco's
tony University Club, certain he could poach some talent there. When Drako handed his card to a
potential recruit who had been out of work for six months, the person looked at the company's
Campbell (Calif.) address and sniffed: "Oh, forget it, you're geographically undesirable." Says
Drako: "He practically handed my business card back to me!"

WAITING IT OUT
Even some people from hard-hit cities such as Detroit and Cleveland have passed up
well-paying jobs with medical device companies in places like North Carolina because they don't
want to move, says Lisa Mesnard, an executive recruiter with the Wellington Group in Fuquay-
Varina, N.C. "I find it daily," she says. "They're ingrained in the community. [Although] they
don't have a job, they're willing to wait it out."

Where moving is not an issue, employers are nonetheless exasperated by the difficulty of
filling jobs when so many people are out of work. Just ask Irina Lutinger, who is at wits' end
trying to hire laboratory workers at NYU Langone Medical Center in Manhattan. The senior
administrative director for clinical laboratories says 10% of the unionized jobs are unfilled,
slowing down patients' lab work. Laboratory technologists earn from the mid-$40,000s to the
high $60,000s a year, with good medical benefits and four weeks of vacation. Is that attracting
career switchers who want to get retrained and take the licensing exam? Says Lutinger: "We
haven't seen it yet here."

Labor advocates don't buy the argument that the U.S. is suffering from worker shortages.
They say employers simply aren't willing to pay enough to attract workers. "Whenever
employers want a more vulnerable workforce, they declare a labor shortage," says Ana
Avendaño, chief counsel and director of the immigration worker program for the AFL-CIO. She
has a point. For example, the shortage of primary care physicians that President Barack Obama
has been talking about would likely work itself out if primary care doctors were paid anything
close to what specialists get.

But higher pay is no panacea. Some jobs require specialized skills for which no amount
of money will generate higher labor supply until a new generation can be trained. Demand for
accountants, for example, is likely to stay strong even after the financial crisis. Right now, "the
restructuring business, bankruptcy attorneys ... they all are incredibly busy. And it's not as if you
can all of a sudden invent these people," says Brian Sullivan, chairman and CEO of CTPartners,
a New York-based executive search firm.

IBM (IBM) is feeling the skills mismatch problem as it changes its focus to services and
data analysis. On Apr. 28, Big Blue announced that it plans to add 4,000 specialists in what it
calls "analytics." It hopes to get as many as possible by retraining, using some of its $1 billion-a-
year training budget. Consultants who install software might learn to help companies spot
patterns in their data to improve efficiency. But IBM is still laying off thousands of people who
have no place in the new company. "It's really easy to find people that are 50% of what you are
looking for," says Jim Spohrer, director of university programs at IBM. "It's really hard to find
people that are 90% of what you are looking for. This is a real dilemma."

DESCENDING THE ECONOMIC LADDER

Good help can be hard to find at the bottom of the pay scale, too. In Maryland's
Dorchester County, where the jobless rate is 11.5%, crab processors are trying to fill 300 jobs
that pay $6.71 to $14 an hour depending on how quickly people can pick meat from crab shells.
Most of the work is done by Mexican women on temporary work visas. Crab companies held a
job fair in early April, but only two locals applied. "People don't want to go back down the
economic ladder," says Bill Sieling, executive director of the Chesapeake Bay Seafood Industries
Assn.

Does the persistence of job openings coupled with high unemployment mean that the
U.S. is at risk of becoming like the Europe of the recent past, with its rigid labor markets? Could
be. Obama's stimulus package improves U.S. jobless benefits, which while justifiable on
humanitarian grounds do make workers less eager to jump at the first job offer. The housing
crash has increased immobility. And the sheer length of this recession is making jobless
Americans rustier and less employable, says economist Laurence M. Ball of Johns Hopkins
University. To fight this sclerosis, the White House is using $3.5 billion of the stimulus for
training, while boosting support for community colleges. Classes for factory workers seeking
entry-level health-care careers have shown some success.

The truth is, displaced workers may have to move down a few rungs as they switch
careers because their skills are irrelevant in their new roles, says David H. Autor, a labor
economist at the Massachusetts Institute of Technology. Many laid-off Wall Street financial
engineers still haven't absorbed that, says Fred Wilson, a partner in Union Square Ventures, a
New York venture capital firm. "For them to take a job that pays a lot less, they have to make a
meaningful change in their lifestyle. And that is an issue."

Employers need to bend as well, recognizing that the candidates they're seeking may not
exist. Mark Mehler, co-founder of CareerXRoads, a staffing strategy consulting firm in Kendall
Park, N.J., tells employers: "You're hiring potential....You've got to train them."

A mismatch of work and workers is never a good thing. But smart policy—combined
with realism on the part of employers and job seekers—can minimize the disruption.

References
http://www.businessweek.com/magazine/content/09_19/b4130040117561_page_2.htm
 Bachelor in International
Business

BECON2101- MACROECONOMICS

Title : Individual Assignment

Submission Date : week 9

Lecturer : Mr. Shan

Name : Farkhat Ospanov

Student ID# : N4678139

Semester : 3

Academic Honesty Policy Statement

I,
hereby attest that contents of this attachment are my own work. Referenced works, articles, art,
programs, papers or parts thereof are acknowledged at the end of this paper. This includes data
excerpted from CD-ROMs, the Internet, other private networks, and other people’s disk of the computer
system.

Student’s Signature : _____________________________

 for office use only

DATE : ______________
LECTURER’S COMMMENTS/GRADE:
TIME : ________________

RECEIVER’S NAME : _______

Part 1 - Summary of the article