Rising Unemployment: Caused by Less New Job Creation, Not by

Rising Unemployment: Caused by Less New Job Creation, Not by More Layoffs

The American labor market is remarkably dynamic, even during a downturn. Each month, millions of new jobs are created as entrepreneurs start new companies and existing firms hire new workers. Each month, millions of jobs also disappear as uncompetitive firms go out of business and existing companies let workers go. The diverging futures of Detroit, Michigan, and Greensburg, Indiana, illustrate this tension: Honda has opened a new plant in Indiana creating 2,000 new high-paying jobs while General Motors struggles to survive.

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