Last month's jobs report was a head-scratcher, at least on the surface. After adding roughly 290,000 jobs, the unemployment rate actually inched up to 9.9%. The reason is actually fairly simple. The unemployment rate only captures the number of people who are active job-seekers. In a deep downturn there are many workers so discouraged by the state of the labor market that they choose not to pound the pavement in search of jobs that will never materialize. But when the economy perks up it's only natural that more of these would-be workers become active job-seekers. And so the unemployment rate goes up as the jobs picture brightens.

Does this mean that the U.S. economy is out of the woods and that our jobless recovery is jobless no more? I wish that were true. It seems far more likely that we're about to live through a prolonged period of higher unemployment, unless, that is, we make serious revisions to the way our welfare state works. To understand the new employment landscape, consider a little tweet--that is, a Twitter post--by Jason Calacanis, the famed Silicon Valley entrepreneur and trendsetting Alpha Geek. "Free advice for entitled Gen Y trophy kids: If you spend 12 months at a company over and over you look like a flake."

At first glance this looks like a grizzled veteran of the tech sector grousing about those lousy kids, and that's pretty much right. But there is a deeper meaning to Calacanis' post, which fellow serial entrepreneur and venture capitalist Mark Suster expanded upon in a post helpfully titled "Never Hire Job Hoppers. Never. They Make Terrible Employees." And how does one identify a job hopper? "If you're 30 and have had six jobs since college, you're 98% likely to be a job hopper," Suster writes. "You're probably disloyal. You don't have staying power. You're in it more for yourself than your company." Ouch. Of course, Suster and Calacanis are writing from the perspective of an entrepreneur hiring employees for a startup, and it's natural that someone in that sensitive position wouldn't want to hire footloose employees vulnerable to the siren song of a slightly higher salary at a rival firm.

Startups by nature are small, intensely collaborative teams that flourish on workaholism that yields psychic rewards at least as much as monetary rewards. In his brilliant book Hackers & Painters, Paul Graham argues that a startup basically compresses 20 or 30 years of work effort by above-average problem solvers into a much shorter period of time. The reason most people don't become entrepreneurs is that most people, including most high achievers, can't or won't subject themselves to those hours. It goes without saying that having a job hopper in your midst can make the whole enterprise crumble. Rather than devote all of your time to working together to solve a problem, you have a rotten apple looking to cash out as quickly as possible.

But what does the rarefied world of startups have to do with the broader economy? Look at the employment landscape from the perspective of the job hopper. Suster describes the mentality of Gen Xers, who started their careers in the early 1990s. "We all lost our jobs through downsizing in the early '90s and we felt scarred," he explains. "We realized that there was no such thing as corporate loyalty." In short, job hopping skyrocketed when workers came to understand the dangers of asset specificity. If you spend your entire career at DEC or AT&T and the company goes belly-up, well, you're in bad shape. You mastered a particular corporate bureaucracy, you built up a tremendous amount of capital, and then, poof, it's all gone. Job hopping was and remains a natural defensive reaction. Suster is inclined to blame the job hopper. Yet one could just as easily blame disloyal firms for changing the rules.

In continental Europe this kind of asset specificity is the norm, which is why unemployment compensation tends to be more generous. Those lucky enough to be employed in good middle-class jobs in, say, Germany are relatively unlikely to lose them, and the incentives are such that you're inclined to stay in your job for a long period of time. The financial system is based on close relationships between bankers and industrialists more than on the fast-moving money that defines a more arm's-length financial system in which straightforward metrics like profits matter more than relationships and money always goes where it will get the best return.

If a banker has a long-standing relationship with the owner of a midsize firm, she can say, "Sure, profits were low this quarter, but I know the company is sound and that it'll make a comeback." In an arm's-length world, in contrast, all you have are raw numbers, free of sentimentality. Retaining redundant workers through a downturn, hoping that the economy will pick up steam and you can put them back to good use, doesn't work in an arm's-length world because it makes your cost structure look very grim. So should we shift to relationship finance? The bad news about relationship finance is that it often engenders corruption and, by definition, a lack of transparency. We can't just leap from an arm's-length world to a relationship world, not least because there are pretty serious drawbacks as well as advantages to both models.

Right now, thanks to LinkedIn and Monster.com and dozens of other sites that work to match employers and potential employees, firms can take their time when filling new positions. Manpower Inc., the leader in temporary staffing, has mushroomed as employers choose to hire temps before committing to permanent employees. All of this means that employers have much more flexibility than they used to, and they're shifting risk off of their own balance sheets and onto those of households. Many want to stop this process by, for example, revitalizing organized labor. But that would involve sacrificing huge economy-wide gains in efficiency, a very expensive move in a competitive world.

What we really need is a new social contract, and a welfare state that is designed to facilitate the attainment of new skills and the buildup of assets that can help workers weather new crises. In theory, universal and portable health insurance can do exactly that but only if it is cost-effective and well-designed. And that, alas, is not an accurate characterization of the bloated Patient Protection and Affordable Care Act just passed by Congress. Resolving the unemployment tangle and building the right institutions for the next several decades is the thorniest challenge facing our political class. Unfortunately, they're busy arguing about Elena Kagan and whether or not we actually have to pay for federal spending. It would be funny if it weren't so sad.