Why not also take a look at Google Trends data comparing relative search patterns on “expensive” v “inflation”?
To summarize my opinion, I agree with Hazlitt who argued against the utility of price indexes for economic intervention on the grounds that it is only relative changes between individual prices that communicate meaningful information about monetary stability. The logic behind hedonic adjustments is flawed because people don’t derive utility from “quality improvements” alone; there is also disutility from obsolescence and “relative deprivation“.
What follows is an update to my Feb 14, 2011 post Unemployment Duration and the Labor Market. Back then, Average Weeks Unemployed had just leveled off at a blissful ≈35 weeks. Now at over 40 weeks, businesses have open positions but unemployment is still over 16%, and growth in student loan debt shows no sign of abating.
However, I’m not advocating for student loan forgiveness. I have made significant sacrifices to live well below my means and it would be a travesty to see my selfish and profligate peers rewarded for not taking the same measures.
No, the real problem is real prices; to be addressed at length in the future.
Some of the complaints about skill shortages boil down to the fact that employers can’t get candidates to accept jobs at the wages offered. That’s an affordability problem, not a skill shortage. A real shortage means not being able to find appropriate candidates at market-clearing wages.
Over the next decade the Bureau of Labor Statistics projects that the greatest number of employment gains will be made in low-wage industries not requiring a college degree. Nasser believes that education debt will place an additional drag on America’s low-wage, low-purchasing power future. For many, the debt will delay or put entirely out of reach things like owning a home or a car.
While the headlines often report on the “official unemployment rate*” (U-3 Total unemployed, as a percent of the civilian labor force, seasonally adjusted), the average duration of unemployment tells us much more about the seriousness of conditions in the labor market. From January 2001 through December 2007, the mean Average Weeks Unemployed is 17.2 weeks; and on the graph below, one can clearly see how far we have departed from that benchmark.
Average Weeks Unemployed (blue line, left axis) and Percent Change Year-Over-Year** (red line, right axis)
*For alternative measures of labor underutilization, visit BLS Table A-15
**I initially looked at percent change month-over-month, but it seems more intuitive to compare year-over-year due to seasonality.
"They say the world has become too complex for simple answers. They are wrong. There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right." - Ronald Reagan