In September, the country gained a net of 158,000 jobs, and in August we gained 104,000. However, that is a very small fraction of the total number of jobs that were actually created. It subtracts out the number of jobs that were also destroyed in the month.
In any economic environment, there will always be jobs being created, and jobs being lost. The difference between them is what gets the headlines. However, with a month’s delay we get to look a little bit deeper and see not just the net number of jobs created or lost, but the totals on each side of the equation. It also tells how many job openings there were in the economy.
This is in the “Job Openings and Labor Turnover Survey,” or JOLTS. Today we got the JOLTS for September (in October we gained 80,000, but we will have to wait a month to get the JOLTS details).
In September, the total number of job openings decreased by 7.2% to 3.354 million. Relative to a year ago, they are up 21.7%. On the other hand, there were 13.99 million unemployed in September (falling to 13.90 million in October) so that means there were 4.17 people looking for each available job in September.
If just private sector jobs openings are considered, the number of job openings rose by 6.8% on the month and is up 23.0% year over year. That is very real progress, but while that is better than a year ago when there were 14.88 million unemployed and 2.756 million openings — for a ratio of 5.40 unemployed per opening — it still means it is tough to find a job. Still, that is a major improvement from the peak of that ratio of 7.20 in July of 2009. In a healthy economy the ratio is more like two to one.
The ratio is still more than twice what it was before the start of the Great Recession, even if it is down 42.1% from its July 2009 peak. The graph below shows the ratio of unemployed to job openings.
On just the private sector side, the number of people getting hired rose 6.75% on the month of September and is up 23.01% on the year. Total Government job openings were up 11.25% on the month, and are up 12.27% from a year. Government hires were down 4.73% on the month but up 2.75% from a year ago.
The graph below (from http://www.calculatedriskblog.com/) shows the number of job openings (yellow line), the number of people being hired (purple line), the number of people being laid off (or being fired or retiring, red bar) and the number of people quitting (blue bar). The difference between the purple line and the top of the stacked blue bar corresponds (roughly) to the number of net jobs gained or lost in the economy in that month as reported in the big employment report. Note that the yellow job openings line is now at its highest point since the summer of 2008.
Unfortunately, the JOLTS survey only goes back to 2001, so it is of limited usefulness in comparing where we are relative to coming out of other recessions. One thing, though, that jumps off the chart is that both the rate of new hiring and the total number of job losses are well below historical averages. In other words, the key reason so many people are out of work is a lack of hiring, not an excessive amount of firing.
Back when it looked like the entire economy was coming apart at the seams, the last thing you wanted to do was quit your existing job. That is changing fairly dramatically. The number of people who quit their jobs rose by 2.09% on the month and is up 11.12% year over year. The increase in the number of quits is an encouraging sign.
There is a concern out there that some of the unemployment that we are seeing in the economy is turning into structural unemployment rather than just cyclical unemployment. I personally think the vast majority of the evidence points to most of the unemployment problem being cyclical, due to a lack of aggregate demand, not structural.
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