Lots of available jobs, still no higher wages

Aug 12, 2014 20:35 UTC

Job openings in the US economy are at a 13-year high. The monthly Job Openings and Labor Turnover Summary (JOLTS) report was released by the Bureau of Labor Statistics today. It shows there were  4.67 million job openings in the month of June, up just a tad from the 4.6 million openings reported in May — it’s now the highest the job openings figure has been since February 2001.

St. Louis Fed

The separations rate is unchanged at 3.3 percent. Within that category, quits and discharge rates were also unchanged, at 1.8 percent and 1.2 percent, respectively. Bill McBride at Calculated Risk charts the updated data, breaking out quits and layoffs in addition to hires and job openings:

Bill McBride/Calculated Risk

McBride notes that quits — meaning people left voluntarily — are up 15 percent year-over-year. More people are quitting voluntarily as more jobs are becoming available. Theoretically, this means wages should be going up (which we haven’t seen yet). The Bespoke blog does a little analysis about what this means:

Until businesses are willing to pay more for the marginal employee, there is a limit to how much quit rates can go up and job openings can come down.  This is bad news for the average American, as they won’t see their incomes rise.  What is bad news for the average American, though, is good news for inflation.  Until wages increase, in order to lure labor off the sidelines or out of their current job into one of the open positions that keep piling up, inflation should remain low.


Curve fitting at its best.
What about the fact that this article says nothing about the “Q” factor of either the Quits, Hires, Layoffs or Openings.

New floor traders fail at anticipating market movements because they see all market data as supporting evidence to their thesis. As a result, markets break them into little pieces. They lose their money.
I am therefore not surprised to see economists and reporters do the same. Unfortunately, the evidence at street level shows that things are far from the rosy image your article suggests.
Remember that optimism will never replace execution; and ours is a poorly executed recovery.

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July jobs report: Stagnant wages

Aug 1, 2014 18:12 UTC

It’s Jobs Friday! This morning, the Bureau of Labor Statistics released data for non-farm payrolls for the month of July. The economy created 209,000 jobs last month and the unemployment rate ticked up to 6.2%. The headline number came in a bit under consensus (a Reuters poll of economists expected growth of 233,000), but was overall not a terrible number. The data today really preserves the status quo.

The Reuters Graphics team has recently debuted some really great jobs-related interactive charts. Here are some highlights:


There are a number of labor market indicators in this interactive, but wage growth is one of the data points that Fed chair Janet Yellen cares about most. Average hourly earnings grew by a single penny in July (to $24.45), and have grown just 2 percent over the past 12 months. This suggests that even though unemployment is coming down, the labor market is still weak. Theoretically, if there was healthy competition in the job market, companies would be offering higher wages, and we aren’t seeing that yet.

This chart has a lot going on, but that orange line, which has been going up pretty consistently since 2008, are the number of people who aren’t in the labor force in the U.S. Generally, an upward trend was to be expected as the Baby Boomers started to retire, but there’s still plenty of people in there that aren’t looking for jobs because they are discouraged and have dropped out of the labor market. The green line is the number of unemployed. It’s slowly but steadily coming down (although that’s a mix of people getting jobs and people dropping out of the labor force). The black line is number of jobs in the economy. We’re barely, barely ahead of where we were more than six years ago.


Of course wages aren’t going up.

What company has anyone ever worked at that jump at the chance to blame the economy for the 0% annual increases?

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Did start-ups hold back the recovery?

Jul 8, 2014 21:01 UTC

When you say the word start-up, many people think of the wild proliferation of tech companies in Silicon Valley: Stanford grads sitting in a basement with their friends being offered obscene amounts of money for a mobile app that simply sends a one-word message to a user’s contacts. But economically speaking, a startup is any business that’s less than five years old and has fewer than 20 employees. And, tech bubble or not, start-ups in general have not done so well in the wake of the Great Recession.

A new research note out from the San Francisco Fed concludes that “low growth among start-ups at the beginning of the current recovery may have contributed to slow employment growth overall.”


Since start-ups often growth more quickly in the early stages of a recovery, the researchers think as much as 0.7% of overall job growth could have been added per year if startups had added as many employees as they did in previous recoveries.

The share of employment gains by newer small businesses early in this economic recovery Great Recession was abysmal compared to previous recoveries. (More specifically, the researchers looked at one year, from March 2010 – March 2011, which was the first March-March period with positive growth since the end of the recession.)  The slow growth may have had something to do with the housing crisis, since “about seven out of ten businesses used personal or family assets for start-up funding.”

“Because start-ups add so many jobs early in recoveries, even modest slowdowns in the creation of new businesses could significantly reduce overall employment growth,” say the researchers. By comparison, look at how 2010-2011 stacks up against the 1983-1984 recovery, which the researchers chose to showcase the last recovery from a really deep recession.


Today’s jobs report in charts

Jul 3, 2014 20:55 UTC

Non-farm payrolls for June were released Thursday, and by most accounts this was a great month for job growth. The economy added 288,000 jobs, way more than the 215,000 that were expected. Reuters has a full live blog of the commentary that came out after the report. Here are some of the best charts from the blog:


Almost every industry expanded this month, and many were at the high end of the range of monthly changes over the last four years.



Joe Weisenthal drew attention to this chart of average hourly earnings , as Fed chair Janet Yellen has indicated she wants to see an increase before she really believes the employment situation is solid. This month, earnings rose, but not by much. From the report: “Average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $24.45, following a 6-cent increase in May. Over the past 12 months, average hourly earnings have risen by 2.0 percent.”



The Center for American Progress published this chart, showing how high long-term unemployment (people out of work for 27 weeks or more) still is. Even with the unemployment rate down to 6.1 percent, the economy is still pretty far off from its pre-recession state.


Finally, the employment-to-population ratio for prime-age workers, which is generally trending up. The overall E-P ratio has stayed flat at 59 percent for a while, but that doesn’t factor in the fact that Baby Boomers are hitting retirement age, so the employment rate is naturally coming down. This shows some hope that people of working age are finding jobs and going back to work.

Here’s why it’s so hard to land a job

Jun 25, 2014 13:31 UTC

Six years into the recovery, the American jobs situation is still in a rut. The relationship between how many people are looking for a job (the unemployment rate) and how many jobs are available (the jobs opening rate) has historically been predictable. Plotting it out in chart form gives you what is known as the Beveridge Curve, named after the British economist William Beveridge. The idea is that as the number of workers who are looking for a job rises — which to employers means the pool of talent for them to hire from gets bigger — the available jobs get filled and the opening rate goes down.

This is what it has looked like since 2001:

The Beveridge Curve

The first thing to notice is that something happened in 2008: the Beveridge Curve shifted to the right and stayed that way. That means employers aren’t hiring as many unemployed people as they should be, according to a pre-2008 view of the world. It is also one of the reasons the economy feels like it is still bad, even though the recession officially ended five years ago.

The question is why is the curve so far off from what would be expected in a normal recovery? And how can things be brought back on track?

The answer often cited is that the economy has a skills mismatch. Fewer people are finding jobs than they have in the past because they aren’t qualified for the jobs that are available. This is less about the Great Recession and more about changing technology and needs. Imagine a 45-year-old man who has worked in an auto factory his whole life up until it was shut down in 2009. He can’t be quickly or easily retrained to be a nurse or a computer programmer, which are the only jobs he sees available that pay as much as his old manufacturing job, so he remains unemployed.

But there’s a problem with this theory: if the problem really is a mismatch of jobseekers to jobs, why did it happen so suddenly? The decline in manufacturing and the need for computer programmers existed long before 2009. Plus, as Dean Baker notes, if a skills mismatch really were the big problem, wages should be rising for those who do have the skills (and the jobs). But they’re not.

Economist Brad DeLong floated another reason for the shift a few days ago. The shift in the curve might be because of a collapse of social networks. He doesn’t mean Facebook friends, but the loose network acquaintances people have in their daily lives (maybe even people you’ve met but aren’t friends with on Facebook).

Think of your aunt’s best friend who you see at a July 4 party once a year, who paid you $50 to organize all her files one summer when you were 15. She might say, “Hey, my office is looking for an administrative assistant, and I heard from your aunt that you need a job. Send me your resume.” DeLong is worried that young people might not have enough of those connections, and, more worryingly, that older workers that got laid off during the Recession haven’t kept up with their old connections. Submitting a resume through a computerized system is just not as effective as knowing someone in real life..

Then the next question becomes: what caused the atrophy of our social networks?


Age discrimination still exists even in boom times. It’s just given other names such as “over-qualified” or “not skilled in current technology” or…

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After six years, the US economy got its jobs back

Jun 6, 2014 15:57 UTC

“The scariest jobs chart ever”, which Bill McBride at Calculated Risk has been updating month by month for years, is finally ready to be retired.

That’s right — with the 217,000 jobs added in May, the US economy is finally, finally back to the pre-recession employment level.

Screen Shot 2014-06-06 at 11.30.08 AM.png

And yet, while US employment is technically at an all-time high, we’re still behind. While the US now has more jobs than before the recession, the population has grown a lot in the last six years, and the labor force participation rate is the lowest it has been since 1978.

Breathe a sigh of relief at this milestone, but know we still have a long way to go.


That only cost 30 trillion more in global debt, 21 trillion in corporate debt, and 12 trillion in published and unpublished money printing. Just to name a few indicators but not all.

I wonder how much the next cycle of central bank boom and bust will cost and how large that arch will be?

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America’s job market: still not good enough

Ben Walsh
Mar 11, 2014 21:23 UTC

On Tuesday morning, the most recent Bureau of Labor Statistics Job Openings and Labor Turnover (JOLTs) data showed that the rate of hiring, turnover, and the number of open jobs was basically flat.

A little explanation: The hiring rate is the number of peopled hired as a percent of total employment. The JOLTs report also tracks the quits rate, which is the number of people who have voluntarily quit as a percent of total employment. Taken together, the quit rate and the hire rate represent a good proxy for the level of choice workers, particularly the already employed, have in the job market.

This chart shows that the level of choice in the job market within the workforce plummeted during the Great Recession. It has gradually improved over the last four years, but is still at right around 2008 levels. And this is likely still not fully representative of the job market: because it tracks quits, and there is a bias to hire the already employed, this chart more accurately reflects job choice among the employed than the unemployed.

Job growth is showing much the same pattern. Looking at the data since late 2011, the NYT’s Neil Irwin concluded that the “jobs recovery in the United States is astonishingly consistent, astonishingly resilient, and astonishingly underwhelming”, holding steady at an annual rate of just over 2 million:




The terrible December jobs report

Jan 10, 2014 15:29 UTC

The jobs report is out today, and it’s weak. The economy added 74,000 jobs in December — the lowest growth the economy has seen since January 2011 and far below the expectation of 196,000. Because of people dropping out of the labor force, the unemployment rate dropped to 6.7% from 7.0% in November. Here’s Reuters’ chart of U.S. non-farm payrolls over the last year:

One theory of why the job growth number was so weak in December, put forth by a number of people including Felix Salmon, is because of unusually bad weather. This chart from Justin Lahart shows the number of people, in thousands, who had a job but who weren’t paid during the survey week because of weather:

Former Labor Department deputy chief economist Jared Bernstein doesn’t think it had a big effect. In his analysis of this month’s BLS report he wrote, tThe BLS commissioner mentioned unusually cold weather as one factor possibly driving down construction, which lost 13,000 jobs after averaging +10,000 per month last year. But nothing else jumped out at me.”

The bigger problem is the number of people dropping out of the labor force. The Economic Policy Institute has a good series of interactive charts on those “missing workers” who should be either working or looking for a job, but aren’t. Here’s one on the age and gender of those workers:

Then, of course, there is Bill McBride’s updated chart of the current economic recovery compared to recoveries from previous recessions since World War II:

Finally, here’s the payrolls gap. At the current level of growth, it will take another 16 months to get back to the number of jobs the economy had before the 2008 recession.


You voted…twice…

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Fewer Americans are getting laid off, but not enough are getting hired

Ben Walsh
Nov 21, 2013 15:25 UTC

The number of Americans filing new claims for unemployment benefits is at a two-month low, data released by the Labor Department this morning shows.  From the report:

In the week ending November 16, the advance figure for seasonally adjusted initial claims was 323,000, a decrease of 21,000 from the previous week’s revised figure of 344,000. The 4-week moving average was 338,500, a decrease of 6,750 from the previous week’s revised average of 345,250.

Reuters writes that the new data suggests “some strengthening of labor market conditions”. However, “while layoffs have slowed significantly to normal levels, there has not been a rapid acceleration in hiring as domestic demand remains lukewarm”.

Reuters charts jobless claims, as well as  average unemployment duration, and the labor market participation rate:







Obama, Pelosi, Reid, Schummer and the rest of the Democrats are not interested in creating jobs. They are interested only in things that advance them. If we had great economic conditions we would have low unemployment and good benefits and income for our families. The Democrats fight hard to keep Social Security, the Post Office and the like under government control so these can be used as political tools to advance the Democrats causes. This is why these institutions are in such dire financial shape. Things will be better when Obama is out of office and another party takes over unless we have a socialistic or communist party, which is where Obama is taking the U.S.

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America’s mediocre labor market recovery, in charts

Oct 22, 2013 13:13 UTC

Economists expected a gain of 180,000 jobs in September, while today’s Commerce Department data showed a gain of just 148,000 jobs. Here’s today’s disappointing results in chart form:


And here’s a look at America’s labor force, which has been shrinking over the last few years:


The Economic Policy Institute has this look at exactly who is leaving the labor force for various reasons:

Calculated Risk has updated this stark visualization of America’s job market:

As the American Enterprise Institute’s Michael Strain noted, the 3-month moving average of job growth is looking quite ugly:


On a more hopeful note, Matt Phillips of Quartz has a good look at where job growth is happening:

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