Mike Konczal has another excellent post, this time on the whole question of why employment remains so low. As he points out,

Why is unemployment so bad in this recession? There are two theories at work. The first is a story of aggregate demand. The second theory is one of a mismatch in skills.

What he doesn’t say explicitly, although it’s clearly implied, is that these two theories have very different policy implications. If it’s aggregate demand, we should be doing everything we can to raise demand, including fiscal expansion and unconventional monetary policy. If it’s mishmash mismatch, we should do nothing, because any effort to create jobs leaves part of the work of depressions undone.

So how would you decide between these theories? The answer is to look at the evidence — specifically, to ask whether what we see bears the “signature” of one story or the other. The aggregate demand story suggests that we should see depressed employment in all industries, that we should see workers of every skill type facing a poor job market. The mismatch story says that we should see surpluses of labor in some places, but shortages in others.

And Mike shows that the data overwhelmingly fit the demand story, not the mismatch story; Every single major industry has seen a rise in involuntary part-time work; so has every major occupation. There’s no hint that any major kind of labor, in any sector, is in short supply.

Let me add another piece of evidence. We’ve been talking a lot lately about the NFIB data on small businesses, and how weak sales — not concern about taxes or regulation — has soared as the perceived biggest problem. But there’s something else these data show: concerns about quality of labor have plunged:

National Federation of Independent Businesses

This strongly suggests that it’s a weak labor market for everyone out there, and businesses have no trouble finding the workers they need; they just don’t know what to do with those workers, given weak demand.

The evidence, then, is overwhelmingly in favor of a demand story. But the mismatch people don’t want to hear that — and they have substantial influence. And so the slump goes on.

Update: Nick Rowe made this point first. Did I get it from him? I have no idea.