Misleading Math on the Korea Free Trade Agreement
This post was updated at 5:43 pm to reflect additional analysis.
Today, the Washington Post fact checker, Glenn Kessler, claimed that Public Citizen’s analysis of the Korean Free Trade Agreement (KORUS) is based on flawed economics and faulty math. Kessler accepts the White House claim that the employment effect of the KORUS should be based only “on a gain in merchandise exports,” and then claims that “the most appropriate way to look at export flows would be on an annual basis, which shows a net gain of about $2.3 billion. That’s theoretically a gain of 15,000—a far cry from the loss of 85,000 [jobs],” as estimated by Public Citizen. By ignoring imports, Kessler completely ignores one of the most important factors in the effects of trade on employment.
Imports reduce the demand for domestic goods and services. This is a fundamental assumption in introductory (and applied) macroeconomics. By ignoring it, Kessler denies his readers critical information needed to evaluate Public Citizen’s claim.
The Fact Checker approach (and the White House’s KORUS trade and job estimate) is a form of bookkeeping which counts only the credits and ignores the debits. It would earn a failing grade in any basic accounting class. Kessler spends a lot of time talking about things that make job and export calculations difficult (overall economic health, and the state of the business cycle), and yet he glosses over the impact of imports. It’s really important to calculate the jobs impact of both exports and imports, and it’s easy to do.
No Worker Shortages, but Some Sectors Show Improved Opportunities
I’ve written before about how one of the recurring myths following the Great Recession has been that recovery in the labor market has lagged because workers don’t have the right skills. The figure below, which shows the number of unemployed workers and the number of job openings in February by industry, is the best way to rebut this idea. If today’s labor market woes were the result of skills shortages or mismatches, we would expect to see some sectors where there are significantly more unemployed workers than job openings, and others where there are significantly more job openings than unemployed workers. What we find when looking at the data is that there are more unemployed workers than jobs openings in most industries.
Last year, the graph showed that the number of unemployed workers exceeded job openings in all industries, but there have been some signs of tightening in February. For several months now, health care and social assistance was the only sector where those workers appeared to be facing a tighter labor market. Now, it appears that they are not alone: finance and insurance and wholesale trade both have job seekers and job openings close to on par with each other.
This within-sector tightening is a small sign of good news in February’s JOLTS report. Unfortunately, other sectors have seen little-to-no improvement in their job-seekers-to-job-openings ratios. There are, for example, still five-and-a-half unemployed construction workers for every job opening. In other words, despite claims from some employers, there is no shortage of construction workers.
In fact, while the market does appear to be improving for some types of unemployed workers, there are no significant worker shortages anywhere in the economy. Taken as a whole, these numbers demonstrate that the main problem in the labor market is a broad-based lack of demand for workers—not available workers lacking the skills needed for the sectors with job openings.
The Quits Rate Exemplifies a Far From Strong Economy
The hires, quits, and layoffs rates all held fairly steady in the February Job Openings and Labor Turnover Survey (JOLTS) report.
As you can see in the figure below, layoffs shot up during the recession but recovered quickly and have been at prerecession levels for more than three years. The fact that this trend continued in February is a good sign. That said, not only do layoffs need to come down before we see a full recovery in the labor market, hiring needs to pick up. The hires rate was unchanged in February. It has been generally improving, but it still remains below its prerecession level.
The voluntary quits rate fell slightly from 2.0 in January to 1.9 in February, the same rate it had been for both November and December. In February, the quits rate was still 9.2 percent lower than it was in 2007, before the recession began. A larger number of people voluntarily quitting their jobs indicates a strong labor market—one where workers are able to leave jobs that are not right for them and find new ones. Before long, we should look for a return to pre-recession levels of voluntary quits, which would mean that fewer workers are locked into jobs they would leave if they could. But we are not there yet.
Hires, quits, and layoff rates, December 2000–February 2015
| Month | Hires rate | Layoffs rate | Quits rate |
|---|---|---|---|
| Dec-2000 | 4.1% | 1.4% | 2.3% |
| Jan-2001 | 4.4% | 1.6% | 2.6% |
| Feb-2001 | 4.1% | 1.4% | 2.5% |
| Mar-2001 | 4.2% | 1.6% | 2.4% |
| Apr-2001 | 4.0% | 1.5% | 2.4% |
| May-2001 | 4.0% | 1.5% | 2.4% |
| Jun-2001 | 3.8% | 1.5% | 2.3% |
| Jul-2001 | 3.9% | 1.5% | 2.2% |
| Aug-2001 | 3.8% | 1.4% | 2.1% |
| Sep-2001 | 3.8% | 1.6% | 2.1% |
| Oct-2001 | 3.8% | 1.7% | 2.2% |
| Nov-2001 | 3.7% | 1.6% | 2.0% |
| Dec-2001 | 3.7% | 1.4% | 2.0% |
| Jan-2002 | 3.7% | 1.4% | 2.2% |
| Feb-2002 | 3.7% | 1.5% | 2.0% |
| Mar-2002 | 3.5% | 1.4% | 1.9% |
| Apr-2002 | 3.8% | 1.5% | 2.1% |
| May-2002 | 3.8% | 1.5% | 2.1% |
| Jun-2002 | 3.7% | 1.4% | 2.0% |
| Jul-2002 | 3.8% | 1.5% | 2.1% |
| Aug-2002 | 3.7% | 1.4% | 2.0% |
| Sep-2002 | 3.7% | 1.4% | 2.0% |
| Oct-2002 | 3.7% | 1.4% | 2.0% |
| Nov-2002 | 3.8% | 1.5% | 1.9% |
| Dec-2002 | 3.8% | 1.5% | 2.0% |
| Jan-2003 | 3.8% | 1.5% | 1.9% |
| Feb-2003 | 3.6% | 1.5% | 1.9% |
| Mar-2003 | 3.4% | 1.4% | 1.9% |
| Apr-2003 | 3.6% | 1.6% | 1.8% |
| May-2003 | 3.5% | 1.5% | 1.8% |
| Jun-2003 | 3.7% | 1.6% | 1.8% |
| Jul-2003 | 3.6% | 1.6% | 1.8% |
| Aug-2003 | 3.6% | 1.5% | 1.8% |
| Sep-2003 | 3.7% | 1.5% | 1.9% |
| Oct-2003 | 3.8% | 1.4% | 1.9% |
| Nov-2003 | 3.6% | 1.4% | 1.9% |
| Dec-2003 | 3.8% | 1.5% | 1.9% |
| Jan-2004 | 3.7% | 1.5% | 1.9% |
| Feb-2004 | 3.6% | 1.4% | 1.9% |
| Mar-2004 | 3.9% | 1.4% | 2.0% |
| Apr-2004 | 3.9% | 1.5% | 2.0% |
| May-2004 | 3.8% | 1.4% | 1.9% |
| Jun-2004 | 3.8% | 1.4% | 2.0% |
| Jul-2004 | 3.7% | 1.4% | 2.0% |
| Aug-2004 | 3.9% | 1.5% | 2.0% |
| Sep-2004 | 3.8% | 1.4% | 2.0% |
| Oct-2004 | 3.9% | 1.4% | 2.0% |
| Nov-2004 | 3.9% | 1.5% | 2.1% |
| Dec-2004 | 4.0% | 1.5% | 2.1% |
| Jan-2005 | 3.9% | 1.4% | 2.1% |
| Feb-2005 | 3.9% | 1.4% | 2.0% |
| Mar-2005 | 3.9% | 1.5% | 2.1% |
| Apr-2005 | 4.0% | 1.4% | 2.1% |
| May-2005 | 3.9% | 1.4% | 2.1% |
| Jun-2005 | 3.9% | 1.5% | 2.1% |
| Jul-2005 | 3.9% | 1.4% | 2.0% |
| Aug-2005 | 4.0% | 1.4% | 2.2% |
| Sep-2005 | 4.0% | 1.4% | 2.3% |
| Oct-2005 | 3.8% | 1.3% | 2.2% |
| Nov-2005 | 3.9% | 1.2% | 2.2% |
| Dec-2005 | 3.7% | 1.3% | 2.1% |
| Jan-2006 | 3.9% | 1.3% | 2.1% |
| Feb-2006 | 3.9% | 1.3% | 2.2% |
| Mar-2006 | 3.9% | 1.2% | 2.2% |
| Apr-2006 | 3.8% | 1.3% | 2.1% |
| May-2006 | 4.0% | 1.4% | 2.2% |
| Jun-2006 | 3.9% | 1.2% | 2.2% |
| Jul-2006 | 3.9% | 1.3% | 2.2% |
| Aug-2006 | 3.8% | 1.2% | 2.2% |
| Sep-2006 | 3.8% | 1.3% | 2.1% |
| Oct-2006 | 3.8% | 1.3% | 2.1% |
| Nov-2006 | 4.0% | 1.3% | 2.3% |
| Dec-2006 | 3.8% | 1.3% | 2.2% |
| Jan-2007 | 3.8% | 1.2% | 2.2% |
| Feb-2007 | 3.8% | 1.3% | 2.2% |
| Mar-2007 | 3.8% | 1.3% | 2.2% |
| Apr-2007 | 3.7% | 1.3% | 2.1% |
| May-2007 | 3.8% | 1.3% | 2.2% |
| Jun-2007 | 3.8% | 1.3% | 2.0% |
| Jul-2007 | 3.7% | 1.3% | 2.1% |
| Aug-2007 | 3.7% | 1.3% | 2.1% |
| Sep-2007 | 3.7% | 1.5% | 1.9% |
| Oct-2007 | 3.8% | 1.4% | 2.1% |
| Nov-2007 | 3.7% | 1.4% | 2.0% |
| Dec-2007 | 3.6% | 1.3% | 2.0% |
| Jan-2008 | 3.5% | 1.3% | 2.0% |
| Feb-2008 | 3.5% | 1.4% | 2.0% |
| Mar-2008 | 3.4% | 1.3% | 1.9% |
| Apr-2008 | 3.5% | 1.3% | 2.1% |
| May-2008 | 3.3% | 1.3% | 1.9% |
| Jun-2008 | 3.5% | 1.5% | 1.9% |
| Jul-2008 | 3.3% | 1.4% | 1.8% |
| Aug-2008 | 3.3% | 1.6% | 1.7% |
| Sep-2008 | 3.1% | 1.4% | 1.8% |
| Oct-2008 | 3.3% | 1.6% | 1.8% |
| Nov-2008 | 2.9% | 1.6% | 1.5% |
| Dec-2008 | 3.2% | 1.8% | 1.6% |
| Jan-2009 | 3.1% | 1.9% | 1.5% |
| Feb-2009 | 3.0% | 1.9% | 1.5% |
| Mar-2009 | 2.8% | 1.8% | 1.4% |
| Apr-2009 | 2.9% | 2.0% | 1.3% |
| May-2009 | 2.8% | 1.6% | 1.3% |
| Jun-2009 | 2.8% | 1.6% | 1.3% |
| Jul-2009 | 2.9% | 1.7% | 1.3% |
| Aug-2009 | 2.9% | 1.6% | 1.3% |
| Sep-2009 | 3.0% | 1.6% | 1.3% |
| Oct-2009 | 2.9% | 1.5% | 1.3% |
| Nov-2009 | 3.1% | 1.4% | 1.4% |
| Dec-2009 | 2.9% | 1.5% | 1.3% |
| Jan-2010 | 3.0% | 1.4% | 1.3% |
| Feb-2010 | 2.9% | 1.4% | 1.3% |
| Mar-2010 | 3.2% | 1.4% | 1.4% |
| Apr-2010 | 3.1% | 1.3% | 1.5% |
| May-2010 | 3.3% | 1.3% | 1.4% |
| Jun-2010 | 3.1% | 1.5% | 1.5% |
| Jul-2010 | 3.2% | 1.6% | 1.4% |
| Aug-2010 | 3.0% | 1.4% | 1.4% |
| Sep-2010 | 3.1% | 1.4% | 1.5% |
| Oct-2010 | 3.1% | 1.3% | 1.4% |
| Nov-2010 | 3.1% | 1.4% | 1.4% |
| Dec-2010 | 3.2% | 1.4% | 1.5% |
| Jan-2011 | 3.0% | 1.3% | 1.4% |
| Feb-2011 | 3.1% | 1.3% | 1.4% |
| Mar-2011 | 3.3% | 1.3% | 1.5% |
| Apr-2011 | 3.2% | 1.3% | 1.5% |
| May-2011 | 3.1% | 1.3% | 1.5% |
| Jun-2011 | 3.3% | 1.4% | 1.5% |
| Jul-2011 | 3.2% | 1.3% | 1.5% |
| Aug-2011 | 3.2% | 1.3% | 1.5% |
| Sep-2011 | 3.3% | 1.3% | 1.5% |
| Oct-2011 | 3.2% | 1.3% | 1.5% |
| Nov-2011 | 3.2% | 1.3% | 1.5% |
| Dec-2011 | 3.2% | 1.3% | 1.5% |
| Jan-2012 | 3.2% | 1.3% | 1.5% |
| Feb-2012 | 3.3% | 1.3% | 1.6% |
| Mar-2012 | 3.3% | 1.3% | 1.6% |
| Apr-2012 | 3.2% | 1.4% | 1.6% |
| May-2012 | 3.3% | 1.4% | 1.6% |
| Jun-2012 | 3.2% | 1.3% | 1.6% |
| Jul-2012 | 3.2% | 1.2% | 1.6% |
| Aug-2012 | 3.3% | 1.4% | 1.6% |
| Sep-2012 | 3.1% | 1.3% | 1.4% |
| Oct-2012 | 3.2% | 1.3% | 1.5% |
| Nov-2012 | 3.3% | 1.3% | 1.6% |
| Dec-2012 | 3.2% | 1.1% | 1.6% |
| Jan-2013 | 3.3% | 1.2% | 1.7% |
| Feb-2013 | 3.4% | 1.2% | 1.7% |
| Mar-2013 | 3.2% | 1.3% | 1.5% |
| Apr-2013 | 3.3% | 1.3% | 1.7% |
| May-2013 | 3.3% | 1.3% | 1.6% |
| Jun-2013 | 3.2% | 1.2% | 1.6% |
| Jul-2013 | 3.3% | 1.2% | 1.7% |
| Aug-2013 | 3.4% | 1.2% | 1.7% |
| Sep-2013 | 3.4% | 1.3% | 1.7% |
| Oct-2013 | 3.3% | 1.1% | 1.8% |
| Nov-2013 | 3.4% | 1.1% | 1.8% |
| Dec-2013 | 3.3% | 1.2% | 1.7% |
| Jan-2014 | 3.3% | 1.3% | 1.7% |
| Feb-2014 | 3.4% | 1.2% | 1.8% |
| Mar-2014 | 3.4% | 1.2% | 1.8% |
| Apr-2014 | 3.5% | 1.2% | 1.7% |
| May-2014 | 3.5% | 1.2% | 1.8% |
| Jun-2014 | 3.5% | 1.2% | 1.8% |
| Jul-2014 | 3.6% | 1.3% | 1.8% |
| Aug-2014 | 3.4% | 1.2% | 1.8% |
| Sep-2014 | 3.6% | 1.2% | 2.0% |
| Oct-2014 | 3.7% | 1.2% | 2.0% |
| Nov-2014 | 3.6% | 1.1% | 1.9% |
| Dec-2014 | 3.7% | 1.2% | 1.9% |
| Jan-2015 | 3.5% | 1.2% | 2.0% |
| Feb-2015 | 3.5% | 1.1% | 1.9% |
Note: Shaded areas denote recessions. The hires rate is the number of hires during the entire month as a percent of total employment. The layoff rate is the number of layoffs and discharges during the entire month as a percent of total employment. The quits rate is the number of quits during the entire month as a percent of total employment.
Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey
Another Month, Same Story: Job Openings Data Little Changed in February
The employment situation for March showed downward revisions to payroll employment in both January and February and a considerably slower growth in jobs in March. This morning’s Job Openings and Labor Turnover Survey (JOLTS) report generally corroborates that story—the recovery hasn’t stalled, but it isn’t doing much better than simply chugging along.
The total number of job openings reached 5.1 million in February; the number of unemployed workers fell to 8.7 million. Taken together, the result was a slight drop in the job-seekers-to-job-openings ratio. In February, there were 1.7 times as many job seekers as job openings. This ratio has been declining steadily from its high of 6.8-to-1 in July 2009, as shown in the figure below.
The job-seekers ratio, December 2000–February 2015
| Month | Unemployed job seekers per job opening |
|---|---|
| Dec-2000 | 1.1 |
| Jan-2001 | 1.1 |
| Feb-2001 | 1.3 |
| Mar-2001 | 1.3 |
| Apr-2001 | 1.3 |
| May-2001 | 1.4 |
| Jun-2001 | 1.5 |
| Jul-2001 | 1.5 |
| Aug-2001 | 1.7 |
| Sep-2001 | 1.8 |
| Oct-2001 | 2.1 |
| Nov-2001 | 2.3 |
| Dec-2001 | 2.3 |
| Jan-2002 | 2.3 |
| Feb-2002 | 2.4 |
| Mar-2002 | 2.3 |
| Apr-2002 | 2.6 |
| May-2002 | 2.4 |
| Jun-2002 | 2.5 |
| Jul-2002 | 2.5 |
| Aug-2002 | 2.4 |
| Sep-2002 | 2.5 |
| Oct-2002 | 2.4 |
| Nov-2002 | 2.4 |
| Dec-2002 | 2.8 |
| Jan-2003 | 2.3 |
| Feb-2003 | 2.5 |
| Mar-2003 | 2.8 |
| Apr-2003 | 2.8 |
| May-2003 | 2.8 |
| Jun-2003 | 2.8 |
| Jul-2003 | 2.8 |
| Aug-2003 | 2.7 |
| Sep-2003 | 2.9 |
| Oct-2003 | 2.7 |
| Nov-2003 | 2.6 |
| Dec-2003 | 2.5 |
| Jan-2004 | 2.5 |
| Feb-2004 | 2.4 |
| Mar-2004 | 2.5 |
| Apr-2004 | 2.4 |
| May-2004 | 2.2 |
| Jun-2004 | 2.4 |
| Jul-2004 | 2.1 |
| Aug-2004 | 2.2 |
| Sep-2004 | 2.1 |
| Oct-2004 | 2.1 |
| Nov-2004 | 2.3 |
| Dec-2004 | 2.1 |
| Jan-2005 | 2.2 |
| Feb-2005 | 2.1 |
| Mar-2005 | 2.0 |
| Apr-2005 | 1.9 |
| May-2005 | 2.0 |
| Jun-2005 | 1.9 |
| Jul-2005 | 1.8 |
| Aug-2005 | 1.8 |
| Sep-2005 | 1.8 |
| Oct-2005 | 1.8 |
| Nov-2005 | 1.7 |
| Dec-2005 | 1.7 |
| Jan-2006 | 1.7 |
| Feb-2006 | 1.7 |
| Mar-2006 | 1.6 |
| Apr-2006 | 1.6 |
| May-2006 | 1.6 |
| Jun-2006 | 1.6 |
| Jul-2006 | 1.8 |
| Aug-2006 | 1.6 |
| Sep-2006 | 1.5 |
| Oct-2006 | 1.5 |
| Nov-2006 | 1.5 |
| Dec-2006 | 1.5 |
| Jan-2007 | 1.6 |
| Feb-2007 | 1.5 |
| Mar-2007 | 1.4 |
| Apr-2007 | 1.5 |
| May-2007 | 1.5 |
| Jun-2007 | 1.5 |
| Jul-2007 | 1.6 |
| Aug-2007 | 1.6 |
| Sep-2007 | 1.6 |
| Oct-2007 | 1.7 |
| Nov-2007 | 1.7 |
| Dec-2007 | 1.8 |
| Jan-2008 | 1.8 |
| Feb-2008 | 1.9 |
| Mar-2008 | 1.9 |
| Apr-2008 | 2.0 |
| May-2008 | 2.1 |
| Jun-2008 | 2.3 |
| Jul-2008 | 2.4 |
| Aug-2008 | 2.6 |
| Sep-2008 | 3.0 |
| Oct-2008 | 3.1 |
| Nov-2008 | 3.4 |
| Dec-2008 | 3.7 |
| Jan-2009 | 4.4 |
| Feb-2009 | 4.6 |
| Mar-2009 | 5.4 |
| Apr-2009 | 6.1 |
| May-2009 | 6.0 |
| Jun-2009 | 6.2 |
| Jul-2009 | 6.8 |
| Aug-2009 | 6.5 |
| Sep-2009 | 6.2 |
| Oct-2009 | 6.5 |
| Nov-2009 | 6.3 |
| Dec-2009 | 6.1 |
| Jan-2010 | 5.6 |
| Feb-2010 | 5.9 |
| Mar-2010 | 5.7 |
| Apr-2010 | 4.9 |
| May-2010 | 5.1 |
| Jun-2010 | 5.3 |
| Jul-2010 | 5.0 |
| Aug-2010 | 5.1 |
| Sep-2010 | 5.2 |
| Oct-2010 | 4.8 |
| Nov-2010 | 4.9 |
| Dec-2010 | 4.9 |
| Jan-2011 | 4.8 |
| Feb-2011 | 4.5 |
| Mar-2011 | 4.4 |
| Apr-2011 | 4.5 |
| May-2011 | 4.6 |
| Jun-2011 | 4.4 |
| Jul-2011 | 4.0 |
| Aug-2011 | 4.4 |
| Sep-2011 | 3.9 |
| Oct-2011 | 4.0 |
| Nov-2011 | 4.1 |
| Dec-2011 | 3.7 |
| Jan-2012 | 3.5 |
| Feb-2012 | 3.6 |
| Mar-2012 | 3.3 |
| Apr-2012 | 3.5 |
| May-2012 | 3.4 |
| Jun-2012 | 3.4 |
| Jul-2012 | 3.5 |
| Aug-2012 | 3.4 |
| Sep-2012 | 3.3 |
| Oct-2012 | 3.3 |
| Nov-2012 | 3.2 |
| Dec-2012 | 3.4 |
| Jan-2013 | 3.3 |
| Feb-2013 | 3.0 |
| Mar-2013 | 3.0 |
| Apr-2013 | 3.1 |
| May-2013 | 3.0 |
| Jun-2013 | 3.0 |
| Jul-2013 | 3.0 |
| Aug-2013 | 2.9 |
| Sep-2013 | 2.8 |
| Oct-2013 | 2.7 |
| Nov-2013 | 2.7 |
| Dec-2013 | 2.6 |
| Jan-2014 | 2.6 |
| Feb-2014 | 2.5 |
| Mar-2014 | 2.5 |
| Apr-2014 | 2.2 |
| May-2014 | 2.1 |
| Jun-2014 | 2.0 |
| Jul-2014 | 2.0 |
| Aug-2014 | 1.9 |
| Sep-2014 | 2.0 |
| Oct-2014 | 1.9 |
| Nov-2014 | 1.9 |
| Dec-2014 | 1.8 |
| Jan-2015 | 1.8 |
| Feb-2015 | 1.7 |
Note: Shaded areas denote recessions.
Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey and Current Population Survey
What’s notably missing from the story are the millions of workers who have been sidelined because of weak job opportunities. When the number of unemployed workers fell in February, the numbers of missing workers ticked up. While it’s important not to put too much weight into any one month’s number, it’s unlikely that a continued fall in the job-seekers-to-job-openings ratio is sustainable in the near term as more workers enter or re-enter the labor force when job opportunities grow.
Millions of potential workers sidelined: Missing workers,* January 2006–March 2015
| Date | Missing workers |
|---|---|
| 2006-01-01 | 610,000 |
| 2006-02-01 | 160,000 |
| 2006-03-01 | 190,000 |
| 2006-04-01 | 300,000 |
| 2006-05-01 | 170,000 |
| 2006-06-01 | 110,000 |
| 2006-07-01 | 60,000 |
| 2006-08-01 | -140,000 |
| 2006-09-01 | 90,000 |
| 2006-10-01 | -130,000 |
| 2006-11-01 | -380,000 |
| 2006-12-01 | -650,000 |
| 2007-01-01 | -670,000 |
| 2007-02-01 | -480,000 |
| 2007-03-01 | -420,000 |
| 2007-04-01 | 340,000 |
| 2007-05-01 | 200,000 |
| 2007-06-01 | 80,000 |
| 2007-07-01 | 90,000 |
| 2007-08-01 | 560,000 |
| 2007-09-01 | 150,000 |
| 2007-10-01 | 480,000 |
| 2007-11-01 | -140,000 |
| 2007-12-01 | -250,000 |
| 2008-01-01 | -790,000 |
| 2008-02-01 | -330,000 |
| 2008-03-01 | -480,000 |
| 2008-04-01 | -260,000 |
| 2008-05-01 | -730,000 |
| 2008-06-01 | -610,000 |
| 2008-07-01 | -640,000 |
| 2008-08-01 | -650,000 |
| 2008-09-01 | -350,000 |
| 2008-10-01 | -550,000 |
| 2008-11-01 | -300,000 |
| 2008-12-01 | -300,000 |
| 2009-01-01 | -100,000 |
| 2009-02-01 | -230,000 |
| 2009-03-01 | 210,000 |
| 2009-04-01 | -130,000 |
| 2009-05-01 | -200,000 |
| 2009-06-01 | -260,000 |
| 2009-07-01 | 120,000 |
| 2009-08-01 | 410,000 |
| 2009-09-01 | 1,220,000 |
| 2009-10-01 | 1,350,000 |
| 2009-11-01 | 1,400,000 |
| 2009-12-01 | 2,100,000 |
| 2010-01-01 | 1,660,000 |
| 2010-02-01 | 1,540,000 |
| 2010-03-01 | 1,320,000 |
| 2010-04-01 | 770,000 |
| 2010-05-01 | 1,330,000 |
| 2010-06-01 | 1,710,000 |
| 2010-07-01 | 1,880,000 |
| 2010-08-01 | 1,490,000 |
| 2010-09-01 | 1,850,000 |
| 2010-10-01 | 2,320,000 |
| 2010-11-01 | 1,960,000 |
| 2010-12-01 | 2,390,000 |
| 2011-01-01 | 2,460,000 |
| 2011-02-01 | 2,630,000 |
| 2011-03-01 | 2,430,000 |
| 2011-04-01 | 2,500,000 |
| 2011-05-01 | 2,590,000 |
| 2011-06-01 | 2,670,000 |
| 2011-07-01 | 3,110,000 |
| 2011-08-01 | 2,520,000 |
| 2011-09-01 | 2,510,000 |
| 2011-10-01 | 2,540,000 |
| 2011-11-01 | 2,510,000 |
| 2011-12-01 | 2,470,000 |
| 2012-01-01 | 2,780,000 |
| 2012-02-01 | 2,540,000 |
| 2012-03-01 | 2,530,000 |
| 2012-04-01 | 2,890,000 |
| 2012-05-01 | 2,480,000 |
| 2012-06-01 | 2,240,000 |
| 2012-07-01 | 2,770,000 |
| 2012-08-01 | 2,830,000 |
| 2012-09-01 | 2,690,000 |
| 2012-10-01 | 2,130,000 |
| 2012-11-01 | 2,480,000 |
| 2012-12-01 | 2,060,000 |
| 2013-01-01 | 2,340,000 |
| 2013-02-01 | 2,690,000 |
| 2013-03-01 | 3,130,000 |
| 2013-04-01 | 2,880,000 |
| 2013-05-01 | 2,740,000 |
| 2013-06-01 | 2,580,000 |
| 2013-07-01 | 2,860,000 |
| 2013-08-01 | 3,010,000 |
| 2013-09-01 | 3,130,000 |
| 2013-10-01 | 3,810,000 |
| 2013-11-01 | 3,360,000 |
| 2013-12-01 | 3,550,000 |
| 2014-01-01 | 3,420,000 |
| 2014-02-01 | 3,200,000 |
| 2014-03-01 | 2,840,000 |
| 2014-04-01 | 3,670,000 |
| 2014-05-01 | 3,410,000 |
| 2014-06-01 | 3,320,000 |
| 2014-07-01 | 3,170,000 |
| 2014-08-01 | 3,260,000 |
| 2014-09-01 | 3,580,000 |
| 2014-10-01 | 3,060,000 |
| 2014-11-01 | 3,030,000 |
| 2014-12-01 | 3,230,000 |
| 2015-01-01 | 2,860,000 |
| 2015-02-01 | 3,110,000 |
| 2015-03-01 | 3,330,000 |
* Potential workers who, due to weak job opportunities, are neither employed nor actively seeking work
Note: Volatility in the number of missing workers in 2006–2008, including cases of negative numbers of missing workers, is simply the result of month-to-month variability in the sample. The Great Recession–induced pool of missing workers began to form and grow starting in late 2008.
Source: EPI analysis of Current Population Survey public data series
H-1B Proponents Hide Abuses Behind Phony Claims
This piece originally appeared in The Hill.
The April Fool is anyone who reads Alex Nowrasteh’s column about H-1B guest-workers and believes his bunk. If he had actually read the paper he cites about the effect of H-1B workers on American productivity he’d know that his claims are ludicrous. The paper doesn’t find that H-1B workers “have increased American productivity by 10 to 25 percent from 1990 to 2010”; it makes that estimate for the entire foreign STEM workforce, which includes one hundred thousand foreign students in the Optional Practical Training program who graduated with STEM degrees from U.S. schools, L-1 visa holders, and 300,000…
Total Jobs Sputter in March While Wages Continue to Sing the Same Slow Song
As I wrote earlier today, while it may be too soon to sound the alarm, this morning’s Employment Situation Report should give us pause. The bottom line is this: only 126,000 jobs added in March and the downward revision of 38,000 jobs in February, together make for disappointing numbers. While it’s important not to put too much stock in a couple months of data—especially since February and March’s job creation numbers were likely dampened by the unusually large amount of snow that blanketed the country those two months—policymakers should be wary of any signs of any slowdown from the solid job growth over the previous year.
Other indicators make it clear that there is still ample slack in the labor market, most notably in the continuing trend of inadequate wage growth—private sector hourly wages are up only 2.1 percent over the year. The chart below looks at both private sector wages and the wages of production and nonsupervisory workers over the last several years, and it’s clear that wages according to either measure are far below target.
There was, however, one positive wage sign: a mild acceleration in quarter over quarter hourly wages. The annualized increase between 2014 Q4 and 2015 Q1 was 2.8 percent, reasonably faster than trend 2.0 percent. Despite this mild acceleration, we need to see even faster growth, and for a longer time, before we can say the economy is truly working for working people. The slow growth of private sector wages coupled with a few months of disappointing jobs growth mean that the Federal Reserve should not be thinking about tapping the brakes any time soon.
Nominal wage growth has been far below target in the recovery: Year-over-year change in private-sector nominal average hourly earnings, 2007–2015
| All nonfarm employees | Production/nonsupervisory workers | |
|---|---|---|
| Mar-2007 | 3.5910224% | 4.1112455% |
| Apr-2007 | 3.2738095% | 3.8461538% |
| May-2007 | 3.7257824% | 4.1441441% |
| Jun-2007 | 3.8062284% | 4.1267943% |
| Jul-2007 | 3.4482759% | 4.0524434% |
| Aug-2007 | 3.4940945% | 4.0404040% |
| Sep-2007 | 3.2827046% | 4.1493776% |
| Oct-2007 | 3.2778865% | 3.7780401% |
| Nov-2007 | 3.2714844% | 3.8869258% |
| Dec-2007 | 3.1599417% | 3.8123167% |
| Jan-2008 | 3.1067961% | 3.8619075% |
| Feb-2008 | 3.0947776% | 3.7296037% |
| Mar-2008 | 3.0813674% | 3.7746806% |
| Apr-2008 | 2.8818444% | 3.7037037% |
| May-2008 | 3.0172414% | 3.6908881% |
| Jun-2008 | 2.6666667% | 3.6186100% |
| Jul-2008 | 3.0000000% | 3.7227950% |
| Aug-2008 | 3.3285782% | 3.8263849% |
| Sep-2008 | 3.2258065% | 3.6425726% |
| Oct-2008 | 3.3159640% | 3.9249147% |
| Nov-2008 | 3.6406619% | 3.8548753% |
| Dec-2008 | 3.5815269% | 3.8418079% |
| Jan-2009 | 3.5781544% | 3.7183099% |
| Feb-2009 | 3.2363977% | 3.6516854% |
| Mar-2009 | 3.1293788% | 3.5254617% |
| Apr-2009 | 3.2212885% | 3.2924107% |
| May-2009 | 2.8358903% | 3.0589544% |
| Jun-2009 | 2.7829314% | 2.9379157% |
| Jul-2009 | 2.5889968% | 2.7056875% |
| Aug-2009 | 2.3930051% | 2.6402640% |
| Sep-2009 | 2.3437500% | 2.7457441% |
| Oct-2009 | 2.3383769% | 2.6272578% |
| Nov-2009 | 2.0529197% | 2.6746725% |
| Dec-2009 | 1.8198362% | 2.5027203% |
| Jan-2010 | 1.9545455% | 2.6072787% |
| Feb-2010 | 1.9990913% | 2.4932249% |
| Mar-2010 | 1.7663043% | 2.2702703% |
| Apr-2010 | 1.8091361% | 2.4311183% |
| May-2010 | 1.9439421% | 2.5903940% |
| Jun-2010 | 1.7148014% | 2.5309639% |
| Jul-2010 | 1.8476791% | 2.4731183% |
| Aug-2010 | 1.7528090% | 2.4115756% |
| Sep-2010 | 1.8410418% | 2.2982362% |
| Oct-2010 | 1.8817204% | 2.5066667% |
| Nov-2010 | 1.6540009% | 2.2328549% |
| Dec-2010 | 1.7426273% | 2.0700637% |
| Jan-2011 | 1.9170753% | 2.1704606% |
| Feb-2011 | 1.8708241% | 2.1152829% |
| Mar-2011 | 1.8691589% | 2.0613108% |
| Apr-2011 | 1.9102621% | 2.1097046% |
| May-2011 | 1.9955654% | 2.1567596% |
| Jun-2011 | 2.1295475% | 1.9957983% |
| Jul-2011 | 2.2566372% | 2.3084995% |
| Aug-2011 | 1.8992933% | 1.9884877% |
| Sep-2011 | 1.9400353% | 1.9331243% |
| Oct-2011 | 2.1108179% | 1.7689906% |
| Nov-2011 | 2.0228672% | 1.7680707% |
| Dec-2011 | 1.9762846% | 1.7680707% |
| Jan-2012 | 1.7497813% | 1.3989637% |
| Feb-2012 | 1.8801924% | 1.4500259% |
| Mar-2012 | 2.0969856% | 1.7607457% |
| Apr-2012 | 2.0052310% | 1.7561983% |
| May-2012 | 1.8260870% | 1.3903193% |
| Jun-2012 | 1.9548219% | 1.5447992% |
| Jul-2012 | 1.7741238% | 1.3333333% |
| Aug-2012 | 1.8205462% | 1.3340174% |
| Sep-2012 | 1.9896194% | 1.4351615% |
| Oct-2012 | 1.5073213% | 1.2781186% |
| Nov-2012 | 1.8965517% | 1.4307614% |
| Dec-2012 | 2.1963824% | 1.7373531% |
| Jan-2013 | 2.1496131% | 1.8906490% |
| Feb-2013 | 2.1030043% | 2.0418581% |
| Mar-2013 | 1.9255456% | 1.8829517% |
| Apr-2013 | 2.0085470% | 1.7258883% |
| May-2013 | 2.0068318% | 1.8791265% |
| Jun-2013 | 2.1303792% | 2.0283976% |
| Jul-2013 | 1.9132653% | 1.9230769% |
| Aug-2013 | 2.2562793% | 2.1772152% |
| Sep-2013 | 2.0356234% | 2.1728146% |
| Oct-2013 | 2.2486211% | 2.2715800% |
| Nov-2013 | 2.2419628% | 2.3173804% |
| Dec-2013 | 1.8963338% | 2.1597187% |
| Jan-2014 | 1.9360269% | 2.3069208% |
| Feb-2014 | 2.1437579% | 2.4512256% |
| Mar-2014 | 2.1830395% | 2.3976024% |
| Apr-2014 | 1.9689987% | 2.3952096% |
| May-2014 | 2.1347844% | 2.4426720% |
| Jun-2014 | 2.0442219% | 2.3359841% |
| Jul-2014 | 2.0859408% | 2.4329692% |
| Aug-2014 | 2.2064946% | 2.4777007% |
| Sep-2014 | 2.0365752% | 2.2749753% |
| Oct-2014 | 2.0331950% | 2.2704837% |
| Nov-2014 | 2.1100538% | 2.2648941% |
| Dec-2014 | 1.8196857% | 1.8682399% |
| Jan-2015 | 2.2295623% | 2.0098039% |
| Feb-2015 | 1.975309% | 1.6601563% |
| Mar-2015 | 2.054232% | 1.8536585% |
| Apr-2015 | 2.177486% | 1.8518519% |
* Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income.
Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series
Method Revisions for the Missing Workers Indicator
Hardcore fans of EPI’s labor market indicators will notice a change today. Our estimate of the number of “missing workers”—potential workers who are no longer classified as in the labor force but who will likely be working or looking for work if the labor market improvement continues—has been revised.
Our earlier estimates were built in large part upon projections for labor force growth contained in a paper published by the Bureau of Labor Statistics in 2007. These projections examined labor force participation rates for age-specific groups of both men and women between 1986 and 1996 and between 1996 and 2006. The paper then projected age- and gender-specific labor force participation rates for 2016.
We used these projected rates to see what labor force participation “should” be in each month between 2006 and 2016, and interpreted shortfalls between the actual participation rate and these projections as how much participation was depressed due to economic weakness, as opposed to structural changes in the labor force, like the retirement of baby boomers. We chose to look at pre-2008 projections precisely because we wanted these projections to be free of any cyclical drag imposed by the Great Recession.
But looking again at these projections recently, we noticed some slightly worrying features. For one, the labor force participation rate for men 25-34 fell significantly in both the 1986-1996 and 1996-2006 periods, yet was projected to rise substantially between 2006 and 2016. Further, the unemployment rate in 1986 was 7.0, the unemployment rate in 1996 was 5.4, and the unemployment rate in 2006 was 4.6 percent. This means that the trends estimated in the BLS projections may be buoyed up by cyclical effects. The BLS projections made no attempt to parse trends in participation rates that were driven by long-run trends versus cyclical weakness in the economy.
Taking the Fall in Atlanta
Eleven Atlanta educators, convicted and imprisoned, have taken the fall for systematic cheating on standardized tests in American education. Such cheating is widespread, as is similar corruption in any institution—whether health care, criminal justice, the Veterans Administration, or others—where top policymakers try to manage their institutions with simple quantitative measures that distort the institution’s goals. This corruption is especially inevitable when out-of-touch policymakers set impossible-to-achieve goals and expect that success will nonetheless follow if only underlings are held accountable for measurable results.
There was little doubt, even before the jury’s decision, that Atlanta teachers and administrators had changed answers on student test booklets to increase scores. There was also little doubt that Atlanta’s late superintendent, Beverly Hall, was partly responsible because she had, as a state investigation revealed, “created a culture of fear, intimidation and retaliation” that had permitted “cheating—at all levels—to go unchecked for years.”
What the trial did not explore was whether Dr. Hall herself was reacting to a culture of fear, intimidation, and retaliation that her board, state education officials, and the Bush and Obama administrations had created. Just as her principals’ jobs were in jeopardy if test scores didn’t rise, her tenure, too, was dependent on ever rising test scores.
Holding educators accountable for student test results makes sense if the tests are reasonable reflections of teacher performance. But if they are not, and if educators are being held accountable for meeting standards that are impossible to achieve, then the only way to meet fanciful goals imposed from above—according to federal law, that all children will make adequate yearly progress towards full proficiency in 2014—is to cheat, using illegal or barely legal devices. It is not surprising that educators do just that.
The Economy Continues to Pay the Price for Austerity
The recent budget negotiations in Congress are a reminder that policymakers can actively slow (or if they choose, speed up) recovery by depressing (or increasing) demand. As the budget talks continue, it is important to remember that more stimulus, not austerity, would have aided in the labor market recovery, and would still be a powerful way to grow the economy.
Austerity at all levels of government continues to be a drag on the economy. The effects of austerity are widespread. Cuts to safety net programs (like SNAP), for instance, not only hurt families, but also decrease demand which would spur on job growth. One clear, direct effect, meanwhile,is the lack of public sector jobs, particularly at the local level—think teachers.
As shown in the figure below, public sector jobs are still nearly half a million down from where they were before the recession began. And, this fails to account for the fact that we would have expected these jobs to grow with the population—taking that into consideration, the economy is short 1.8 million public sector jobs. This shortfall in jobs in turn removes the multiplier effect on private sector demand, snowballing into an even slower recovery.
The National Retail Federation Hates the Proposed Overtime Rules (Even Though No One Knows What They Are)
The National Retail Federation (NRF) doesn’t know what the U.S. Department of Labor’s new rules concerning exemptions from overtime protections will be, but they know they’re against them. Claiming to speak on behalf of managers who might be affected by the not-yet-released rules, NRF says: “Retail managers say the proposed changes to the federal Fair Labor Standards Act regulations show the Department greatly misunderstands their roles in the workplace and would effectively strip retail managers of their salaried status, generating negative consequences for the entire industry.”
But unless someone has leaked the proposed rule to them, NRF is just making things up! What are “the proposed changes to the federal Fair Labor Standards Act regulations” that the managers disapprove? NRF doesn’t say. Equally important, what did NRF tell the managers it surveyed? Why do “75 percent of respondents” say “the changes would diminish the effectiveness of training and hinder managers’ ability to lead by example”? I personally doubt very much the proposed rule, if it is ever issued, will say anything about training.
Some of the NRF report’s “key findings” are pretty wild. For example, “Duties and salary are not effective litmus tests for successful management.” The Fair Labor Standards Act requires employers to pay an overtime premium to all employees, including managers, unless they are bona fide executives, administrators, or professionals. The definition of “executive” has always, since the FLSA was enacted in 1938, used duties tests and the salary level to determine who is a bona fide executive. That is the case today, so the “key finding” is nonsense. The question for the Department of Labor is what salary level is an executive salary? Is it $70,000 a year, or is it the current $23,660 threshold set by the Bush administration in 2004?