Wall Street Journal (01/07/12) Cronin, Brenda

Employment experts say that to truly understand the U.S. labor market, observers need to focus less on the unemployment rate and more on job creation. The current recovery trails previous ones in that area, reflecting, in part, “a very big shift in the way that America runs,” according to Eric Lascelles, chief economist at RBC Global Asset Management. He cites four factors behind today’s weak job generation: first, the extremely slow pace of the overall recovery; second, a sectoral mismatch of workers’ skills to available jobs; third, a geographic mismatch where workers are trapped in areas with few jobs; and fourth, rising efficiency in the work place.

Tom Porcelli, U.S. market economist at RBC Capital Markets, highlights companies’ increased productivity as a strong factor keeping a lid on hiring. When productivity is strong, he says, “companies don’t necessarily have to bring back head count. They can bring back hours first…and that underpins the jobless recovery.”