Economic Report of the President 1994 - The American Presidency ...

that the natural rate is falling? More important, people with collegeeducations have a much lower rate of unemployment thanthose with less education, and their share of the labor force has increasedconsiderably over the last two decades. Again, this wouldsuggest that the natural rate should be lower today than in 1970,before the ratcheting up of the unemployment rate.Finally, although the U.S. Government does not collect the dataon job vacancies that would allow us to examine directly whetherthere is an increasing mismatch of jobs and workers, the ConferenceBoard does publish an index of help-wanted advertising.The relationship between this index and the unemployment ratehas changed over time, but there is no evidence of any increase inthe level of help-wanted advertising, given the unemployment rate,in the last decade. There is, however, a higher level of help-wantedadvertising at all levels of unemployment since the early 1970s.The increase in help-wanted advertising could be interpreted asevidence of an increase in mismatch unemployment, but manyother things affect the level of help-wanted advertising. Differenttypes of employers advertise in different ways for different types ofjobs. Changes in the industrial and occupational mix of employmentmake an advertising index a questionable measure of longtermchanges in job vacancies. Changes in advertising prices, thestructure of media markets, and legal requirements for advertisingcertain jobs also change the relationship between vacancies and advertisingin ways that call into question the meaning of any longtermchanges.Altogether, the various pieces of statistical evidence examined inthe preceding discussion suggest that the increase in the unemploymentrate since 1989 has been largely cyclical in nature. There issome evidence of an increase in the natural rate—possibly due toan increase in mismatch unemployment—in the early 1970s, butlittle evidence of any increase since then. The evidence also suggeststhat today's unemployment rate exceeds the natural rate bya significant amount. Therefore, wage-push price inflation is unlikelyto be a factor constraining economic growth in the near future.THE MAGNITUDE AND COSTS OF JOB LOSSThe U.S. economy is constantly in flux, and while there is no evidencethat the rate of churning in the labor market has increasedin recent years (see the discussion of job stability below), normalrates of structural adjustment are quite high and impose significantcosts.Estimates of the number of jobs created and destroyed each yearin the United States are staggering. Data from various sources suggestthat on average more than 10 percent of all jobs disappear113