Fed economists disagree over construction jobs’ lesson on economy - The Washington Post

Fed economists disagree over construction jobs’ lesson on economy

View Photo Gallery — The U.S. job market: Where do we stand?: The Labor Department released a report on Friday that showed that employers added 120,000 jobs in March. The unemployment rate dropped to 8.2 percent as more people stopped looking for work, according to the Associated Press.

By Peter Whoriskey, Published: April 6

The wreckage left by the housing collapse is well known: The unemployment rate in the construction industry is more than17 percent. About 1.4 million workers in the field are unemployed.
So: Are unemployed construction workers worse off than the rest of the jobless?

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Dueling economists

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Ben S. Bernanke: “Unlikely revolutionary”: Since he was selected in 2005 to replace Alan Greenspan as chairman of the Federal Reserve, Bernanke has made bold, unprecedented moves in an attempt to bolster the U.S. economy.

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This simple question has become a matter of fierce contention among economists because of what it says about the economy and how best to fix it. Last week, it spurred a rather unusual public disagreement between economists in the Federal Reserve.
“Construction workers are not experiencing relatively worse labor market outcomes,” concluded an online article by economists at the Federal Reserve Bank of New York, Richard Crump and Aysegul Sahin.
Within days, their colleagues at the Atlanta Fed issued on their Web site what they called “an alternative view of the fate of unemployed construction workers.”
“Unemployed construction workers are generally experiencing relatively large wage declines relative to what they earned before becoming unemployed,” wrote Pedro Silos and Lei Fang, economists at the Federal Reserve Bank of Atlanta.
Why so much attention on construction workers? The reason is that they have become the focus of a much broader political debate among economists over how best to address lingering joblessness.
On one side of the debate, some say that a significant chunk of the current unemployment stems from shifts in the economy that have created a “mismatch” between the skills that workers have and the skills that the economy needs.
In this view, now that the housing boom has ended and the industry has shrunk, there are simply too many people with construction skills. Likewise, there may be an excess of mortgage brokers. In order to work again, these people may have to go into other professions for which they are unprepared.

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