September 26, 2010, 6:56 am
Structural Unemployment: The First Generation
Who said this? More important, when did he say it?
In the light of this brief survey of the characteristics of the labor supply and the probable demand for labor, what is the outlook for unemployment? My opinion is that the demand, even though active and strong, will be met by supply which will be badly adjusted to fit it. There may very well be a great shortage of labor of certain kinds, with no prospect of any shifting or adapting which will bring about an increased supply. But this will be accompanied by an actual surplus of labor in other occupations. I believe this present labor supply of ours is peculiarly unadaptable and untrained. It cannot respond to the opportunities which industry may offer. This implies a situation of great inequality-full employment, much over-time, high wages, and great prosperity for certain favored groups, accompanied by low wages, short time, unemployment, and possibly destitution for others.
The answer is, it’s from a paper titled The Problem of Unemployment and the Changing Structure of Industry (subscription required), from the Journal of the American Statistical Association, published in 1935. That’s right: in the depths of the Great Depression, wise heads proclaimed the problem one of structural unemployment, which obviously could not be cured just by increasing demand.