We duplicate it here and add some additional data for better understanding.
The Beveridge chart is below, we have used monthly and not quarterly data.
This is Open Jobs versus unemployment. Note that the end points on the lower right are the variations that he points to as they represent the current situation.
We can plot this also as:
The Gap is what we would be concerned about, namely there may be a permanent drop in jobs and this is what concerns him.
Then is we add productivity changes we get the following:
Frankly productivity has been increasing for the past decade and that is not the driver,
He states:
The most tempting explanation for the seeming shift in the Beveridge curve relationship (to me, anyway) is a problem with the mismatch between skills required in the jobs that are available and skills possessed by the pool of workers available to take those jobs. The problem with this tempting explanation is that it is not so clear that the usual sort of structural shifts we might point to—for example, only nursing jobs being available to laid-off construction workers—are so obviously an explanation ... Now I realize that a few anecdotes don't make facts, but I have been in more than a few conversations with businesspeople who have claimed that the productivity gains realized in the United States throughout the recession and early recovery reflect upgrades in business processes—bundled with a necessary upgrade in the skill set of the workers who will implement those processes. This dynamic suggests that the shift in required skills has been concentrated within individual industries and businesses, not across sectors or geographic areas that would be captured by our most straightforward measures of structural change.
The reasons for the change in employment may be more fundamental. Movement to off shore outsourcing and more importantly the movement of the intellectual property based components off shore as well. This would herald a dramatic collapse long term in the US.
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