Even Economists Can't Decide The Cause of High Unemployment

Economists are deadlocked over the root of unemployment, and it may be costing the country billions.

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"This has been a trend going on for quite some time in the U.S. economy. I think the problem is the economic crisis accelerated the trend," he says.

If those who believe unemployment is a structural problem are right, it may mean that Federal Reserve's actions of pumping money into the economy and keeping interest rates historically low have been ineffective. As Richmond Fed President Jeffrey Lacker said last week, "[I]f elevated unemployment reflects largely fundamental factors rather than insufficient spending, [monetary] stimulus might have little impact on unemployment and instead just raise the risk of pushing inflation up."

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If structural problems are to blame, that also means that job-training programs might be a better route to creating jobs than ploys like tax cuts.

On the other hand, if current unemployment is largely cyclical, there is still reason to hope that policymakers will hurry to do what they can before the problem becomes even more stubborn, as Bernanke said in March: "If progress in reducing unemployment is too slow, the long-term unemployed will see their skills and labor force attachment atrophy further, possibly converting a cyclical problem into a structural one."

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.