The elevated level of the official unemployment rate (9.5%) and the broader measure of the jobless rate (16.5%) highlight the dire status of the labor market even after four quarters of economic growth. The monthly employment situation and the weekly jobless claims reports garner attention of financial markets, with the former the large market-moving event of the month. In their assessment of labor market conditions, financial markets have yet to follow closely the report on job openings which contains information each month about the total number of job openings, the pace of hiring, and separations in the economy. Professor Barro's article in today's Wall Street Journal cites a few aspects of this report. Barro draws attention to the March 2009 estimates of hiring (3.9 million) and separations (4.7 million) to support his claim that there was a significant turnover in the labor market even during the deepest phase of the recession (see chart 1).
However, the JOLTS report also indicates that the hiring rate (the number of new hires divided by total nonfarm employment multiplied by 100) was 3.0% in March 2009, the lowest on record in the short history of this series (see chart 2). This is hardly supportive of vibrant labor market conditions. 
There is additional information in the data set which paints a significantly grim labor market. In June 2010, there were 2.937 million jobs available in the U.S. economy vs. a total of 14.599 million officially unemployed. In other words, there was roughly one job for every five aspirants in the job market. The total number of unemployed climbs to 25.841 million in June if we include the number of marginally attached workers and those employed part-time because they have not been able to secure full-time jobs. Based on this estimate of unemployment, there are about 9 job seekers for every opening (see chart 3). Essentially, the short description is that labor market conditions are sluggish not vibrant. 
Prof. Barro uses the peak value of the share of long-term unemployment (25.4%) in the 1981-82 recession and the number currently unemployed for less than 26 weeks to draw his conclusion that the unemployment rate would be 6.8% instead of 9.5% if unemployment insurance benefits were not extended. This back-of-the-envelope calculation is mathematically accurate but economically listless. Assuming the peak value of the share of long-term employment in 1981-82 recession as a starting point is not suitable because the reasons for the current recession are vastly different from the situation in 1982. First, the Fed was engaged in a fierce inflation battle in the early 1980s, which is quite different from today's balance sheet recession where households are highly indebted. Second, the current banking crisis and the most severe credit crunch of the post-war period did not prevail during the 1981-82 recession. Third, a large percentage of the unemployed are not trained to re-enter the workforce. The business expansion of 2001-2007 was fueled by the housing market boom and sharp gains in auto sales. Skills from these sectors are not easily transferable to viable sectors of today's economy. Essentially, economic restructuring has delayed a quick turnaround in business conditions.
For these reasons, attributing the availability of extended unemployment benefits as the reason for the elevated unemployment rate overstates the case. Research of the Federal Reserve Bank of San Francisco (Extended Unemployment and UI Benefits) indicates that "extended unemployment benefits account for 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years."
