The Wrongologist

What’s
Wrong Today:

The BLS’
April Job Openings and Labor Turnover Survey
(or JOLTS) report shows
there are 3.1 official unemployed per job opening, the same as for the past two
months. The JOLTS report includes part-time
jobs and does not make a distinction between part-time, full-time openings.
The JOLTS report lags by a month the published unemployment rate.

To create
the JOLTS report, the BLS takes a random sampling of 16,000 businesses and
derives their numbers from that.  The survey also uses the CES, or current
employment statistics, not the household survey as their base benchmark,
although ratios are coming from the household survey, which provides the tally
of unemployed.

The April
2013 unemployment rate was 7.5%. It went up to
7.6% in May.

From
Wonkblog comes this chart from the Economic
Policy Institute’s Heidi Sheirholz. It is a reminder that the US labor market
is still in rough shape — despite the considerable improvement in recent years.
There were 1.8 official unemployed persons per job opening at the start of the
recession, December 2007.  Below is the graph of the official unemployed
per job opening.  The official unemployed was 11,659 million souls in
April 2013:

The ratio
of jobs to jobless has improved an enormous amount since 2009. But to put
things in perspective, it’s still
worse than it was at any point during the last downturn, which started in 2001.

We see the
same story each month, a mostly static pool of jobs available with employers clearly
not hiring.  Job openings declined 3.0% from last month to a total of
3,757,000.  People hired increased by 4.7% to 4,425 million.  Yet, real hiring has only increased 22% since June 2009.  Although job openings
have increased 72% from July 2009, they are still below pre-recession levels of
4.7 million available jobs. 

The story
is not just that there is not enough hiring, but there are not enough job
openings either.

Sheirholz also notes that the number of
unemployed job-seekers appears to outstrip the number of openings in just about
every industry, from construction to retail to education to hospitality. (The
gap is smallest in mining, but there are relatively few jobs there, compared
with the other sectors.)

Looking
at the broader definition of
unemployment, or U-6, the ratio adds up to 5.8
unemployed people per each job opening. U-6 is
defined as those who are unemployed plus those in part-time positions who would
prefer to be in full-time jobs. This is down from nearly 12 people in July of
2009. The April U-6 unemployment rate was 13.9%.  Below is the graph of
number of unemployed, using the broader U-6 unemployment definition, per job
opening.

Another
big problem is that average hourly compensation has not changed much in the
past year. The chart below shows that only 5 industries have increased wages by
more than the rate of annual inflation. That demonstrates the weakness in the
job market at least as well as does the unemployment rate.

As long as incomes do not
keep up with the underlying rate of inflation, the economy will not manage
enough growth to assist job creation. Average hourly earnings were unchanged in
May, and only 2% higher than year ago levels. In other words, consumers are
simply running in place.

Even more concerning is that many of these positions are being
filled by older, formerly retired persons who are taking away employment
opportunities for young people. The unemployment rate for teenagers (16 to 19 years)
increased to 24.5% in May from 24.1% in April.

This is
not a social judgment; it’s economics: Those in the middle income strata, the primary driver
of the US economy, have fallen to the low income strata and the lowest income stratum
has moved toward poverty.

Businesses
say there are unfilled job openings, but if they hire an H1-b foreign worker rather than an American, what have we gained? 

There are plenty of companies that
keep job ads open even when they’re not actively hiring. They just tighten
their selection criteria to select only superstar candidates who are worth
creating a position for simply to get them on board.

Job demand is not that strong; so the
self-sustaining aspect of labor recovery is absent. When you take into account how much of that
“gain” in a lower unemployment rates that we’ve seen have been people
dropping out of the labor force rather than finding jobs, it’s just an overall
tragedy.

No one in Washington even bothers to
talk about unemployment anymore, but it’s still a big problem.

Congress can and should be doing a
lot more to fix this.