Two Reports Illustrate Housing’s Importance to Job Creation
Two news stories this morning illustrate the daunting challenges the economy continues to face on the road to recovery. First, a New York Times article points out that the Obama Administration was too slow to address the housing market crisis, which has been a major drag on the economy. Meanwhile, a report from the Federal Reserve Bank of New York estimates that about one-third of the jump in unemployment from 5 percent to its 10 percent peak in October 2009 can be traced to a mismatch between the supply of labor and job openings. The remaining two-thirds of the increase is due mainly to a lack of demand. The two reports are more related than one might imagine. “If you fix the housing crisis, you fix the job market,” says employment authority John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “Both the skills mismatch and lack of demand can be traced back to ongoing weakness in the housing market. Job seekers cannot relocate to where the job opportunities exist because they are tied down by underwater mortgages and little savings to fund a move. Meanwhile, the lack of home buying is stifling demand for consumer goods and services. When people buy new homes, they also buy new TVs, washers and dryers, refrigerators and furniture. The lack of demand for these big-ticket items translates to a lack of hiring.” Should the Administration and Congress have done more to help home owners and the housing market? What can be done now to accelerate a housing market recovery? What other factors are leading to continued weakness in hiring?