There is a debate percolating down here in America over whether the unemployment is stuck around 9.6 per cent because of "structural" shifts in the economy or simply lack of demand.
As it turns out, the Federal Open Market Committee has been spending some of its considerable intellectual energy on the subject too.
"Participants discussed the possible extent to which the unemployment rate was being boosted by structural factors such as the mismatches between the skills of the workers who had lost their jobs and the skills needed in the sectors of the economy with vacancies, the inability of the unemployed to relocate because their homes were worth less than their mortgages, and the effects of extended unemployment benefits," the minutes of the FOMC's Sept. 21 meeting, released Tuesday in Washington, said.
Its conclusions? Looks most of Ben Bernanke's policy committee are unconvinced by the structural argument.
"Participants" agreed that structural factors were pushing up the unemployment rate, which was 9.6 per cent in September, but they disagreed on the extent to which this was an issue.
Still, "many participants" felt the unemployment rate was "considerably" above levels that could be explained by structural factors alone, the minutes said.
They pointed to declines in employment across a "wide range" of industries during the recession, relatively low job vacancy rates, and "reports that weak demand for goods and services remained a key reason why firms were adding employees only slowly."