Short Duration Unemployment?

Benjamin Tal over at CIBC thinks there is good news to be found in the fact that the average duration of unemployment is not rising much despite the fact that unemployment is rising rapidly.

As reported in a green shoots kind of good news story by the Globe and Mail

In dramatic contrast to past recessions and the current situation in the U.S., the average length of unemployment in Canada is “relatively stable,” says Benjamin Tal, senior economist, in the latest Consumer Watch Canada report.

“The average duration of unemployment is currently 15 weeks in Canada – a modest increase from the pre-recession level of 14 weeks, and notably lower than the increases seen in the 1991 recession. At the equivalent stage of the 1991 recession, the duration of unemployment was 20 weeks,” notes Mr. Tal.

I’m not convinced.  The average duration of unemployment is surely dragged down by the very large numbers of workers just entering an unemployment spell,  and the rate of job loss has actually accelerated in the last couple of months. Their entry in big numbers arithmetically dilutes the lengthening unemployment spells of those who lost their jobs in the earlier stages of the downturn, which really only began last October.  The Canada-US difference probably reflects the fact that their job market entered into recession much earlier, and thus the stock of unemployed is made up increasingly of people who lost their jobs some time back.  As for the comparison to the last recession,  we went into this one with a much lower unemployment rate and, indeed, very few long term unemployed workers.

Mr. Tal’s full report (the link is in the Globe story) shows that the probability of a quick exit from unemployment is quite high – but the methodology is hardly transparent and I fail to see how this conclusion can be drawn from the average duration data.

One comment

  • What’s with the picture of the globe? I would expect an overlay of the unemployed plotted across the land, and some at sea..keke. People need to open their eyes, but instead look within if we expect any of this to get better. Let’s use the net to collaborate among our fields and rate each other resumes (what does) Let’s call our best friends, or moms (if still alive) and ask ‘what do you think my gift is in this world?) and expressing that to the world to the fullest!

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