Jobs Openings are Down, but the Quits Rate is Up
The September Job Openings and Labor Turnover Survey (JOLTS) data released this morning from the Bureau of Labor Statistics showed mostly positive news. The one bleak spot was job openings, which fell by 118,000 jobs, to 4.7 million. On the other hand, the hires rate and the quits rate both increased, while the layoffs rate held steady.
The figure below shows the hires rate, the quits rate, and the layoffs rate. Layoffs, which shot up during the recession, recovered quickly once the recession officially ended. Layoffs have been at prerecession levels for more than three years. This makes sense—the economy is in a recovery and businesses are no longer shedding workers at an elevated rate. The fact that this trend continued in September is a good sign.
But two things need to happen before we see a full recovery in the labor market: Layoffs need to come down and hiring needs to pick up. While it’s been generally improving, the hires rate, , has not yet come close to a full recovery—it’s well below its prerecession level.
The voluntary quits rate, which has been flat for the last seven months, saw a spike up in September. A larger number of people voluntarily quitting their job indicates a labor market in which hiring is prevalent and workers are able to leave jobs that are not right for them, and find new ones. While these series are somewhat volatile, the sharp increase in the quits rate is a positive sign. That said, there are still 5 percent fewer voluntary quits each month than there were before the recession began. A return to pre-recession levels of in voluntary quits would indicate that fewer workers are locked into jobs they would leave if they could.
Hires, quits, and layoff rates, December 2000–September 2014
| 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 | 3.4% | 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% | 1.4% |
| Oct-2010 | 3.1% | 1.3% | 1.4% |
| Nov-2010 | 3.2% | 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 | 3.2% | 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 | 3.1% | 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% | 1.2% | 1.5% |
| Feb-2012 | 3.3% | 1.3% | 1.6% |
| Mar-2012 | 3.3% | 1.2% | 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% | 1.2% | 1.6% |
| Jan-2013 | 3.2% | 1.2% | 1.7% |
| Feb-2013 | 3.4% | 1.2% | 1.7% |
| Mar-2013 | 3.2% | 1.3% | 1.6% |
| Apr-2013 | 3.3% | 1.3% | 1.6% |
| 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 | 3.3% | 1.1% | 1.8% |
| Dec-2013 | 3.3% | 1.2% | 1.8% |
| Jan-2014 | 3.3% | 1.2% | 1.7% |
| Feb-2014 | 3.4% | 1.2% | 1.8% |
| Mar-2014 | 3.4% | 1.2% | 1.8% |
| Apr-2014 | 3.5% | 1.2% | 1.8% |
| May-2014 | 3.4% | 1.2% | 1.8% |
| Jun-2014 | 3.5% | 1.2% | 1.8% |
| Jul-2014 | 3.6% | 1.2% | 1.8% |
| Aug-2014 | 3.4% | 1.2% | 1.8% |
| Sep-2014 | 3.6% | 1.2% | 2.0% |
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
Jobs Seekers Ratio Holds Steady at 2-To-1
This morning’s Job Openings and Labor Turnover Summary (JOLTS) shows that the total number of job openings in September was 4.7 million, down 118,000 since August. Meanwhile, there were 9.3 million job seekers (unemployment data are from the Census’s Current Population Survey), meaning that there were 2.0 times as many job seekers as job openings in September. Put another way, job seekers so outnumbered job openings that about half of the unemployed were not going to find a job no matter what they did. In a labor market with strong job opportunities, there would be roughly as many job openings as job seekers.
While the jobs-seekers-to-job-openings ratio held steady, it has otherwise been steadily declining since its high of 6.8 to 1 in July 2009, as you can see in the figure below. The ratio has fallen by 0.9 over the last year.
At the same time, the 9.3 million unemployed workers understates how many job openings will be needed when a robust jobs recovery finally begins, due to the existence of 6.3 million would-be workers (in September) who are currently not in the labor market, but who would be if job opportunities were strong. Many of these “missing workers” will become job seekers when we enter a robust jobs recovery, so job openings will be needed for them, too.
Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” with which a company can deal with a job opening. For example, if a company is trying hard to fill an opening, it may increase the compensation package and/or scale back the required qualifications. Conversely, if it is not trying very hard, it may hike up the required qualifications and/or offer a meager compensation package. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical—it tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled when the labor market is weak, as it is today, companies may very well be holding out for an overly qualified candidate at a cheap price.
What Getting Serious About Wages Doesn’t Look Like: Bipartisan “Tax Reform” and Trade Deals
Congress is back in session this week, following an election that saw the Democrats lose control of the Senate and fall further into the minority in the House. A number of postmortems about the election have focused on the issue of wage stagnation—the fact that wages for the bottom 70 percent of the American workforce have essentially seen no increase at all since 1979. Worse, without the full-employment period of the late 1990s that pushed up wages across the board, wages for this group of workers would have outright fallen over the past three decades.
One of the better insights in these postmortems on wages and politics came from Gene Sperling, former economic advisor to both the Clinton and Obama administrations, who told the New York Times that jump-starting wage growth “is not a silver-bullet issue.” Now, part of why I think this is such a good insight is that I’ve said it many times in the past—arguing for a wages policy agenda a long time ago—and reiterated it recently with some colleagues, arguing again for a wage policy agenda with the launch of our Raising America’s Pay project.
But I also like this insight because it’s just obviously true. Unlike, say, health reform or climate change abatement, this is not an issue that lends itself to a single omnibus piece of legislation that will pass and make the problem go away (or even ameliorate it a lot).
Information Technology Agreement is Another Job Killer
This week, U.S. Trade Representative Michael Froman announced a “breakthrough” agreement between the United States and China to expand the World Trade Organization’s (WTO) Information Technology Agreement (ITA), which eliminates tariffs among 54 countries in high-tech products. Froman enthusiastically noted that the ITA was last amended in 1996, when “most of the GPS technology… [and] high-tech gadgetry that we rely on in our lives didn’t even exist.” The United States has a massive and rapidly growing trade deficit in computers and electronic products and related electronic “gadgets.” The proposed expansion of the Information Technology Agreement will open the door to a massive increase in job-destroying imports of Chinese high-tech products.
The U.S. trade deficit in computers and parts increased from $19.9 billion before China entered the WTO in 2001, to an estimated $160 billion in 2014, as shown in the figure below. Job-destroying imports exceed job-supporting exports in this industry by more than 15 to 1. Further opening of the U.S. market to Chinese high tech products will cost hundreds of thousands of jobs. Growing U.S. trade deficits in computers and electronic products eliminated more than 1 million U.S. jobs between 2001 and 2011 alone. Currency manipulation by China (and other countries) acts as a subsidy to all of China’s exports of computers and other products, and as a tax on U.S. exports to China, and every country where U.S. firms compete with Chinese products. Froman is giving away access to U.S. hi-tech markets and seems unaware that the U.S. computer manufacturing and parts industry has been decimated by cheap, subsidized Chinese imports.
Is Even EPI Too Cautious on Wage Growth? Goldman Sachs Seems to Think So
The macroeconomic policy question du jour is when will the Federal Reserve begin raising short-term interest rates to slow economic recovery and reduce inflationary pressures? We at EPI have been pretty clear on when they should do this: not until wage-growth is much, much stronger.
Since the economic channel through which raising rates stems inflationary pressures is slower job growth, leading to a reduction in workers’ bargaining power and reduced wage growth, this makes data on what is actually happening to wage growth crucially important to Fed decision making.
EPI economists have been tracking this a lot recently and have shown how the Fed’s target for overall price inflation (2 percent) is consistent with wage growth of at least 3.5 percent. We calculate this simply by noting that trend productivity growth is likely at least 1.5 percent and pointing out that it takes wages costs in excess of productivity growth to spur any upward pressure on prices at all. We’ve also noted that the very large decline in the overall share of national income going to labor compensation (see Figure G here) means that the economy could afford an extended period of wage growth outpacing the sum of productivity and price inflation, to allow labor income to claw back some gains it lost to capital owners earlier in the recovery.
Yesterday, the macroeconomic team at Goldman Sachs implicitly argued that this 3.5-4 percent wage growth target is too cautious. In a research note released today (no link available, sorry), they argue that trend productivity growth in the non-farm business sector is 2 percent or higher, not 1.5.
Now, you need to discount a little of this (roughly 0.2 percentage points) to translate productivity in the non-farm business sector to total economy productivity, but the fact remains that even extraordinarily cautious estimates of labor productivity growth (i.e., ours) still means that wage-growth could almost double from today’s levels for an extended period before it puts enough upward pressure on wages to force the Fed to act.
Education Policy is Civil Rights Policy
In an article just published in the journal Race and Social Policy, I reviewed why education policy is inseparable from civil rights policy. Failure to recognize this connection is the greatest impediment to improving the academic performance of disadvantaged African American and other minority and low-income children.
For years now, education policymakers and advocates have attempted to close the black-white achievement gap by reforming schools. The primary vehicles have been greater accountability for schools and teachers, higher expectations for students, deregulation and semi-privatization by charter schools, and more recently, curricular reform with the Common Core.
All efforts, however, have come up short. The racial achievement gap remains.
Little-Known Temporary Visas for Foreign Tech Workers Depress Wages
At least 650,000 college-educated temporary foreign workers are employed in the United States through the H-1B visa program, mostly in the high-tech industry. The H-1B is a well-known guestworker program that is inadequately—but at least minimally—regulated, with an annual limit and a requirement that employers pay a “prevailing” wage. Other visa programs, like the L-1 and the F-1 Optional Practical Training (OPT) program, have almost no rules and receive little scrutiny, but are used to employ hundreds of thousands of foreign tech workers. Behind the scenes, the tech industry is pushing President Obama to expand them both as part of executive actions he’s considering on immigration. He should resist.
Here We Go Again: The Polluters and Poisoners Gear Up for the Next Congress
Twenty years ago, the radical wing of the Republican Party announced its “Contract With America,” a set of policies and actions Rep. Newt Gingrich and his caucus pledged to accomplish if they were elected to a majority in Congress. The Contract included eight internal reforms to change congressional operations (things like applying labor laws to Congress and putting term limits on committee chairmen) and ten bills affecting national policy that would be brought to the floor and voted on within the first 100 days of the new Congress.
Gingrich’s early battles ultimately ended in victory for the public and for the environmental and consumer protections he wanted to undo. Gingrich’s bills were made worse as they moved through committee and were amended in the House and Senate, finally resulting in what one senior Republican Senate staffer called “a revolution”—a system that would allow any corporation to escape enforcement through legal or procedural loopholes. Every regulation would be effectively voluntary, and the polluters and producers of unsafe products would have nothing to fear from the EPA, the Consumer Product Safety Commission, OSHA, or any other regulatory agency.
The vehicle for this revolution was one of the first bills considered and passed in the House in 1995, “The Job Creation and Wage Enhancement Act.” Its goal was to subject federal regulations—regardless of statutory mandates to the contrary—to new risk assessment and cost-benefit analysis requirements and to create multiple opportunities for businesses to block federal rules and interfere with their enforcement. Big chemical and pharmaceutical manufacturers didn’t want clean water laws interfering with their profits, the meat industry wanted to prevent new rules about bacteria and contamination, and construction companies didn’t want to have to comply with new workplace safety standards. The legislation would have stopped new rules in their tracks.
Jobs Growth Far from Strong: It Will Be 2018 Before the Economy Looks like 2007
What adjective should we use when we talk about job growth of 214,000 in October? Is it strong, weak, solid? Is it enough? Enough for what?
Take an amble with me through some calculations. If you don’t care to take a walk, the punchline is that if we extrapolate this rate of jobs growth into the future, it will be 2018 before we return to a labor market resembling the one we had before the recession began.
Now for the math. Employment fell dramatically through the recession and its aftermath. The economy has been consistently adding jobs over the last four and a half years. But, we are still experiencing a 6.1 million job shortfall. That’s the amount of jobs needed to keep up with the growth in the potential labor force, shown in the figure below.
Keep the Jobs Coming! People of Color Have Actually Benefited More from Job Growth This Year
Today’s jobs report from the Bureau of Labor Statistics shows that payroll employment has increased by more than 200,000 jobs for nine consecutive months (since February 2014) and the average rate of growth this year has been 232,000 jobs per month, compared to 197,000 jobs per month over the same period last year.
At this stage in the recovery, these numbers demonstrate an important point about the importance of pursuing full employment in lowering unemployment among people of color. The point to be made here is that the longer the economy continues to add jobs, the greater the impact on labor market outcomes for people of color. Over the past twelve months (since October 2013), African Americans and Hispanics have seen larger relative improvements than whites in all the major labor market indicators— unemployment rate, labor force participation, and employment-population (EPOP) ratio. And, most if not all of those improvements have taken place this year (since January 2014). The following chart shows these relative changes over the period of interest.
Starting with the unemployment rate, whites have seen a 1.5 percentage point decline since October 2013, compared to 2.1 and 2.2 percentage points for African Americans and Latinos, respectively. While improvements in the unemployment rate can be distorted by people leaving the labor force, this has not been the case for people of color. The labor force participation rates for African Americans and Latinos have increased over the past year, but declined for whites. In fact, as whites have left the labor force at a higher rate since January 2014, African Americans have entered at a greater rate.
Percentage-point change in unemployment rate, labor force participation rate, and employment-to-population ratio, by race and ethnicity, Oct. 2013–Oct. 2014
| Measure | Race/ethnicity | Oct. 2013–Oct. 2014 | Jan. 2014–Oct. 2014 |
|---|---|---|---|
| Unemployment rate | White | -1.5 | -0.9 |
| Black | -2.1 | -1.2 | |
| Hispanic | -2.2 | -1.6 | |
| Labor force participation rate | White | -0.1 | -0.5 |
| Black | 0.6 | 0.9 | |
| Hispanic | 0.7 | 0.3 | |
| Employment-to-population ratio | White | 0.9 | 0.2 |
| Black | 1.8 | 1.5 | |
| Hispanic | 2.2 | 1.3 |
Source: EPI analysis of Current Population Survey public data series