Robert Murphy Thinks I Fell for a Swindle
By Arnold Kling
Contrary to Sumner, there is no huge reallocation of construction workers (from January 2006 to April 2008) that Kling or the Austrians must explain.
Scott Sumner used housing starts to suggest that most of the decline in housing was behind us by the time of the financial crisis. Murphy instead looks at employment in the construction sector. Overall, about 2 million construction jobs were lost from early 2006 to late 2009. As I read it, about 800,000 of those jobs were lost in 2009. Of the remainder, about half were lost prior to the 2008 financial meltdown, and about half were lost during the meltdown (it depends a bit on whether you say the meltdown started in April or in September).
Read the whole thing (note particularly the data on unoccupied homes). Keep in mind that most of the jobs lost in the past two years were not in construction. So I do think we need a broader theory of macroeconomic job loss. Feel free to revisit If They Had Asked Me.