On May 4, when the U.S. Bureau of Labor Statistics released figures for April, the news was widely interpreted as bad. The total number of people employed had risen by only 115,000, less than in preceding months. And the unemployment rate stayed about the same. Pundits widely portrayed this as evidence that the economys growth was slowing.
Less than a week later, however, the BLS reported another indicator, that the number of unemployed people per job opening had fallen to its lowest level since 2008. And the fraction of people leaving jobs voluntarily, rather than being laid off involuntarily, also rose to its highest level since the beginning of the recession.
These numbers, which were much less widely reported than the bread-and-butter indicators reported a week earlier, are broadly viewed as very positive.
This Job Opening and Labor Turnover Survey, or JOLTS, is entirely separate from the better-known Establishment Survey and Household Survey used to compute the total employment number and the employment rate reported the first week of every month. Since the data takes longer to tabulate, the latest JOLTS survey was from March, rather than April.
So are labor conditions getting better or getting worse? There is no clear answer. Labor markets are about the most difficult aspect of an economy to measure in quantitative terms. They are multidimensional, complex and highly dynamic. Thus there is no single clear way to measure them, and there probably never will be. All one can hope for is that public officials and the general populace understand the main indicators, and their limitations, as well as possible.
Start with the dynamism of the labor market. This is its most underappreciated feature. When employment numbers are reported, the BLS also notes the net change from the prior month. But total job turnover is an order of magnitude higher than the net change. For example, in March, total employed people increased by 155,000. But some 2.1 million people left jobs voluntarily and nearly as many left involuntarily. Yet at the same time, over 4 million jobs were filled. The net result of all this turnover was the increase of 155,000.
Such turnover tends to be less in times of high unemployment than when unemployment is low. Uncertainty and fear breed caution. People are less willing to risk giving up known security, even if the existing job is not fully desirable for whatever reason. The thinking is if you have something acceptable, dont rock the boat by going for something that might be better but is uncertain.
When unemployment rates remain so high, many people are surprised by the number of job openings that are filled with someone already employed elsewhere, rather than from the pool of jobless people. This is a knotty question, and certainly a painful one for people who have been unemployed a long time.
The harsh reality is that to some degree, many employers discriminate among job applicants based on whether they are currently employed or on how long they have been unemployed.
This isnt necessarily fair. But it is an entirely human response to uncertainty. Evaluating applicants takes scarce time and money. If you get myriad applications for an opening, you have to winnow these down to a handful of people to consider closely.
An application from someone currently employed means this person not only has passed some other employers test but also is confident enough about their own abilities to take the risk of applying for something better.
Being unemployed can send a message that some other employer found the person wanting. When a poor economy forces layoffs, employers seldom let people go randomly. Generally, the more valued an employee is, the higher the chances of staying on; the lower an employees perceived performance, the more likely to get a pink slip.
Moreover, the longer a person has been unemployed, the greater the apparent evidence that other potential employers also weighed them on the balance and found them wanting.
Again, this often is unjust and may not reflect reality. Highly qualified, hard-working people get laid off at any time and especially in recessions. But employers who need to make a first cut in a pile of applications tend to resort to quick criteria.
That said, anyone looking for a job has better chances if there are only 3.6 people out of work per new job opening versus the six that prevailed in mid-2009.
There is another important labor dynamic not described in the above reports but increasingly discussed among economists. That is the fact that labor market dynamism also stems from the fact that there are always people joining the labor force for the first time and that there are always people leaving it for the last time.
The most common reason for such permanent departures is taking full retirement. In April, 154 million people were in the labor force. (That is they either had jobs or were actively seeking one.) This is up about 1.5 million from the low reached in February 2008, and at about the same level as mid-2007, before the economic storm clouds burst. But during that time, more than 5 million people permanently retired.
On Jan. 1, 2008, the first baby boomers, born in 1946, became eligible for early Social Security at age 62. But the really big birth cohorts began in 1947-1948. These were sharp increases from the birth dearth years of World War II. So we are just now really getting into the years when retiring baby boomers will increase the number of labor force leavers relative to labor force joiners. This will slow growth of the overall labor force but may improve things for job seekers.
ED LOTTERMAN Economist who teaches and writes in St. Paul, Minn.
Write Edward Lotterman at firstname.lastname@example.org.