Monday, September 08, 2014

Housing Is Being Held Back By a Shortage of Skilled Labor: the Fruits of Malinvestment

How slack are labor markets? Looking at the overall unemployment rate, 6.1% in august according to the Bureau of Labor Statistics,  it would appear there is significant slack still justifying the Fed's draconian  war on interest rates.  Yet evidence indicates that in specific market segments, labor is short.  Here Bloomberg's Mike Mckee reports on home builder's lack of laborers since the recession in this August 19th “Market Makers” video. 

How are we to interpret this?   The huge overhang of housing stock and the mismatch of units built and units demanded depressed housing starts.  The housing bubble had drawn in workers who invested in skills that became redundant when the housing stock was overbuilt.  Their newly acquired human capital became stranded and these skills atrophied during the long resulting recession when the unsustainable levels prior to 2007 could not be maintained. Those workers have retired, gone on to other fields, or joined the ranks of the disabled.

No comments: