Barring any major economic shifts, the labor market generally travels up and down the curve, but the curve itself does not move. It’s painful when the jobless rate gets higher under these circumstances, but it also tends to mean that demand is simply low for goods and services.
But as the above curve shows, there was a big shift outward after July 2009 – meaning that even though the current job vacancy numbers are similar to only a few years ago, the unemployment rate is now higher.
It also could be possible that extensions of jobless benefits helped push the unemployment rate up, the CBO says, as people continued applying for jobs in order to stay in the labor force and continue collecting benefits. However, those effects started tapering off in 2013, as people began exhausting their benefits, according to the CBO.
What it means is that getting the job market back to where it once was will be a matter that involves far more than boosting growth and, therefore, demand. The jobless rate, at 6.7 percent, is roughly 2 full points higher than it was at the end of 2007. According to the CBO, structural factors – things like a broad skills mismatch that is unrelated to the business cycle – account for half that.
Those structural factors, unfortunately, are tricky to solve. It could mean job training, and it could mean pushing employers to hire the long-term unemployed, as President Barack Obama is attempting to do. But they could take years to solve – the CBO predicts that the problems affecting the long-term unemployed won't start to disappear until after 2017.