Karl Smith of Modeled Behavior, an excellent group blog on political economy, has an insightful post on what he calls “the myth of structural unemployment,” and Matt Yglesias has linked approvingly. Smith writes:

The simple fact of the matter is that the structure of the American economy hasn’t changed that much in that last 24 months. We were building houses at an unsustainable rate, sure. But, at its peak the US employed about 7.7 million construction workers. It now employees about 5.8 million. That’s a difference of a little less than 2 million workers or about 1.5% of the American workforce.

He then rightly notes that the decline in manufacturing employment is part of a longer term trend. We’ve seen heavy losses in the service sector, but no one believes that the economy is about to shift away from services. Smith’s conclusion is that we’re dealing with a cyclical problem:

No, by my eyes it looks like that most abhorrent of phenomena – a general glut. People aren’t hiring an especially high number of any profession. And, not to wax too Keynesian but it is because that which they wish to buy is not made by the hands of workmen.
They wish to buy money. And, buying that means making no purchases at all.
All of the pain we see. All of the destroyed lives that Annie and Reihan so eloquently muse about. They are not destroyed by lack of training or shifting winds or even political uncertainty. They are destroyed because monetary policy has hit the zero lower bound. Unlike previous recessions the Fed cannot keep cutting rates until the pain is gone.
This is cyclical problem. This is a monetary problem. And, it will have monetary solution.

Let’s accept that this is true. I wonder if there is nevertheless something structural at work. After noting service sector job losses, Smith begins an extended discussion of where we might be seeing a sectoral shift, and he finds all of the candidates wanting:

Are we to believe that our economy is transforming into the New New Economy where the service sector shrinks in favor of . . . a return to agriculture perhaps?
Maybe I am being to glib. Surely there are some segments within service that are showing rapid signs of change. Perhaps for example, increasing demand for iPhone programmers at the expense of McDonald’s workers?
However, I don’t see much evidence for that either. Information technology has been in a continuous nose dive ever since the dot-com burst.

I’m not convinced that nothing structural is going on. As I understand it, there danger that we’re heading for an increase in structural employment is not only about the downturn. Rather, it is about broader trends, including a declining level of labor force participation among men and new work disincentives, including increases in explicit and implicit marginal tax rates that make employment in the informal sector more attractive.

Scott Winship has a powerful post on the ratio of job openings to unemployed workers. The numbers are sobering, and speak to Smith’s broader point. Yet if we do make it out of this cyclical downturn, as I believe we will, what will the economy look like on the other end? I think that’s an important question, and it’s the question that I tend to dwell on, though I can see why some might find that frustrating given the urgency of the immediate unemployment crisis.