The Structural Signature
the way I usually try to do it is to ask whether the available facts fit the signature the story seems to imply that is, do we see the general pattern that the argument would suggest wed see?
Now consider the argument that our problems are mainly structural. The way this story is usually told is that we had too many workers in the wrong industries, that we have to expect a depressed level of overall employment as workers are moved out of these bloated sectors.
OK, so what should be the signature of that story? Surely it is that job losses should be concentrated in the bloated sectors, that employment should if anything be rising elsewhere and wages should be rising in the unbloated sectors more rapidly than in the bloated ones.
So, lets take a quick look at BLS data on employment and wages. Heres what we get on a first pass:
Kind of looks like job losses everywhere, doesnt it?
And on wages,
Whos bidding for workers?
...
So why are these people so sure that its structural? I know that it sounds wise and Serious to say that it is, but there is this matter of actual evidence; that evidence is strongly inconsistent with a structural story, and quite consistent with a demand story. That doesnt settle the case entirely, but in a better world it would go a long way toward resolving the argument.
Too bad we dont live in that better world.
http://krugman.blogs.nytimes.com/2012/05/08/the-structural-signature/