Job openings and hires ticked up in February

Today’s  Job Openings and Labor Turnover Survey  (JOLTS) reports a promising pickup in both job openings and hires in February 2021, a sign that the recovery is finally moving ahead. The increase in hires was notable in accommodation and food services, but decreases in state and local government education are particularly troubling (though we know from March jobs data that state and local government hiring began to pick up in March). Overall, hires remain below its level before the recession hit, but job openings have now edged above its pre-recession levels. Once public health experts indicate it is safe to reopen and the American Rescue Plan (which was passed after today’s JOLTS data were collected) takes effect, I’m confident those openings will grow and translate into hires. Layoffs have held steady over the last couple of months.

One of the most striking indicators from today’s report from the Bureau of Labor Statistics (BLS) is the job seekers ratio—the ratio of unemployed workers (averaged for mid-February and mid-March) to job openings (at the end of February). On average, there were 9.8 million unemployed workers compared with only 7.4 million job openings. This translates into a job seekers ratio of about 1.3 unemployed workers to every job opening. Put another way, for every 13 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 2.5 million unemployed workers.

As with job losses, workers in certain industries are facing a steeper uphill battle. In the construction industry as well as arts, entertainment, and recreation, there were more than three unemployed workers per job opening. In educational services, accommodation and food services, other services, and transportation and utilities, there were more than two unemployed workers per job opening. As bad as these numbers are, they miss the fact that many more weren’t counted among the unemployed: The economic pain remains widespread with 23.6 million workers hurt by the coronavirus downturn.

On the whole, the U.S. economy is seeing a significantly slower hiring pace than we experienced in May or June. While the pickup in job openings is a promising sign, hiring in February was below where it was before the recession. There was an increase in jobs in the mid-March employment report, but we still have a long way to go before recovering the large job shortfall—11.0 million when using a reasonable counterfactual of job growth if the recession hadn’t occurred—that remains.

Calls to establish a regionally adjusted federal minimum wage are dangerously misguided

We need to raise the federal minimum wage. Its deterioration in value over the past five decades has exacerbated poverty, widened inequality, and lowered wages for the bottom third of wage earners1—despite the fact that these workers typically are older and have more education than their counterparts a generation ago.

One misguided critique of the effort to raise the federal minimum to $15 in 2025 is that there is a need to establish a regionally adjusted federal minimum wage set to local conditions. In fact, federal minimum wage policy has always provided for tailored standards, by coupling a strong national wage floor with the ability for cities and states to adopt higher standards. Our ability to set a national wage floor is much easier now than it was decades ago when lawmakers last raised the federal minimum wage to new heights. In 1968, when the federal minimum wage was lifted to its highest value in U.S. history and coverage of the law was vastly expanded, there were much larger differences in wage levels throughout the country. Yet, we now have empirical evidence that establishing this unprecedented, nationwide minimum wage did not have adverse employment impacts.

Today, the wage levels of lower-wage states, primarily Southern ones, are much closer to overall national wage levels, so there is even less validity to claims that the federal minimum wage must be lowered to accommodate certain areas. Moreover, the ‘bite’ of a $15 minimum wage in 2025—i.e., the share of workers and businesses impacted, and the magnitude of resulting wage increases—will be well within the range of recent experiences of minimum wage increases in states and localities that studies have shown had little, if any, impact on employment. The proposed increase to $15 by 2025 will lead to improved annual earnings for nearly all low-wage workers.

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Strong job growth in March as vaccine distribution expands and the American Rescue Plan ramps up

A solid 916,000 jobs were added in March, the strongest job growth we’ve seen since the initial bounceback faded last summer. Even with these gains, the labor market is still down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession. If we count how many jobs may have been created if the recession hadn’t hit—consider average job growth (202,000) over the 12 months before the recession—we are now short 11.0 million jobs since February.

Even at this pace, it could take more than a year to dig out of the total jobs shortfall. However, today’s number is certainly a promising sign for the recovery, especially as vaccinations increase and vital provisions in the American Rescue Plan (ARP) have continued to ramp up since the March reference period to today’s data. The benefits of the ARP will continue to be captured in coming months.

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What to watch on jobs day: Signs of an improving labor market

Pursuing public health initiatives—including the production and distribution of the vaccine—is the most important priority for our health and economic well-being. Further, investments in state and local governments as well as direct assistance to workers and their families have been essential to their financial security and the economic recovery itself. Given advancements on both fronts in recent weeks and months, I expect the labor market recovery to finally pick up steam.

A year into the recession, the labor market is still down 9.5 million jobs from where it stood immediately before the COVID-19 shock. If we add in jobs that should have been created over that time to absorb new workers, we’re facing a jobs shortfall today of nearly 12 million jobs.

As the labor market finally picks up, the key indicators to watch are where the jobs are returning and for whom. The biggest deficit remains in leisure and hospitality, with 3.5 million fewer jobs relative to its February 2020 level. The economic pain caused by losses in this lowest-paying sector was enormous.

Meanwhile, public-sector employment—primarily education employment at the state and local level—remains 1.4 million jobs below pre-pandemic levels. I’m optimistic that the state and local relief that was part of the American Rescue Plan will provide tremendous support to this sector in terms of employment and the vital public services they provide.

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Businesses can thrive with a higher minimum wage, and government can help

A great deal of research shows that higher minimum wages benefit workers by adding to their income while causing little unemployment, as this report and this report show. Employers can adjust to paying higher wages in three ways: (1) increasing prices, (2) accepting reduced profits, or (3) offsetting higher-wage costs with increased ability by adopting “high-road” practices.

In this blog post, I argue that insufficient attention has been paid to this third channel, and that government efforts to help firms “take the high road” could ease firms’ transition to higher wages in a way that also benefits workers and consumers.

Much research documents the ways that firms can utilize high-road policies or good-jobs strategies to tap the knowledge of all their workers to create innovative products and processes. In retail, for example, firms such as Costco and Trader Joe’s pay far above minimum wage, yet remain profitable, as MIT’s Zeynep Ton has shown. The key to their success is a mix of complementary practices in marketing (reducing the number of products and promotion so that stores can manage inventory efficiently), human resources (cross-training workers so they can respond to a variety of demands), and operations (avoiding unneeded steps, in part by soliciting feedback from employees).

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The H-1B visa program remains the “outsourcing visa”: More than half of the top 30 H-1B employers were outsourcing firms

Key takeaways:

  • Most of the biggest users of the H-1B visas—the U.S.’s largest temporary work visa program—are companies that have an outsourcing business model.
  • These companies exploit the H-1B program’s weaknesses to facilitate the transfer of U.S. jobs offshore as a lower cost alternative to hiring U.S. workers, and sometimes to replace incumbent U.S. workers with H-1B workers who are paid wages that are far below market wage rates.
  • The latest data show that over 33,000 new H-1Bs were issued to the top 30 H-1B employers, accounting for nearly 40% of all new H-1Bs in 2020 that are subject to the annual limit of 85,000.
  • Of the top 30 H-1B employers, 17 of them were outsourcing firms. Those 17 outsourcing firms alone were issued 20,000 H-1B visas, nearly one-quarter of the total 85,000 annual limit.
  • President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.

The U.S.’s largest temporary work visa program is the H-1B—an important program that allows U.S. employers to hire college-educated migrant workers. However, the H-1B program is not operating as intended and needs to be fixed: Instead of being used to fill genuine labor shortages in skilled occupations without negatively impacting U.S. labor standards, the latest data show that the H-1B’s biggest users are companies that have an outsourcing business model. President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.

Outsourcing companies exploit the H-1B program’s weaknesses to build and expand a business model based on outsourcing jobs from other companies. In this arrangement, rather than being employed directly by the outsourcing company that hired them, the outsourcer sends its H-1B workers to work for third-party clients, either on- or off-site. The aim of the outsourcing company is ultimately to move as much work as possible abroad to countries where labor costs are lower and profit margins are higher. The H-1B workers serve three purposes in this business model: to facilitate the transfer of jobs and tasks offshore; to coordinate offshore teams; and to serve as a lower cost alternative to hiring U.S. workers for on-site jobs. H-1B outsourcing companies also replace incumbent U.S. workers with H-1B workers and typically pay their H-1B workers the lowest wages permitted by law, far below market wage rates.

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Next round of recovery spending is about meeting social needs, not filling macroeconomic gaps

Today, President Biden will give a speech laying the groundwork for a new legislative package his administration bills as “building back better.” Much of the debate around this new package has swirled around its headline cost, and we have frequently gotten questions about what is the “right” number for this upcoming proposal.

There is no one right answer to this question. The “right” number for this upcoming proposal depends on what particular set of social problems you think can and should be fixed through public investment and fiscal redistribution. For this reason, any headline cost number needs to be derived from a “bottom-up” assessment that figures out the “right” cost of a rescue package by deciding which specific proposals would be good things to do and scoring them based on that.

Do we want to provide safe drinking water and transportation options for all U.S. families? Then we need to determine a dollar figure that would bring water treatment and transit systems to an acceptable level of quality.

This focus on identifying some “right” number that is derived instead from some top-down macroeconomic analysis is understandable. Since the COVID-19 shock first hit the U.S. economy, there has been an obvious and measurable “output gap” that will eventually need to be filled in to restore the labor market to pre-COVID health (or even better). This output gap is the difference between what the economy could produce if most resources (most importantly, workers) were fully utilized and what is actually being produced. The gap between this potential and actual gross domestic product (GDP) is generally driven by a shortfall of demand (spending by households, businesses, and governments) relative to the economy’s productive capacity. This gap can be reasonably measured (not with real precision, but at least in rough magnitude). Once the gap is identified, policies that pump up spending—either by direct federal government expenditures or by transferring resources to households and state and local governments to spend—can quickly close the gap. It was this sort of rough gap analysis that informed debates about the proper size of the American Rescue Plan (ARP).

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Justice for Asian Americans requires greater understanding and addressing economic realities beyond stereotypes

In the wake of the mass shootings in Atlanta on March 16, we must unite to decry the unacceptable hate and discrimination directed toward Asian Americans. But beyond immediate support and a commitment to justice, the Asian American and Pacific Islander (AAPI) community requires understanding and visibility. And this understanding—particularly with regard to their economic suffering from the pandemic—must be followed by policy, advocacy, and action.

The mass shootings that killed six women of Asian descent and two other people at Atlanta area spas have left the AAPI community in Atlanta and across the country in mourning and on high alert. While the man arrested for the murders has not yet been charged with a hate crime, the hate and discrimination being directed toward Asian Americans is an inescapable fact. According to Stop AAPI Hate, nearly 3,800 incidents targeting Asian-Americans were reported to the organization between mid-March 2020 and the end of February 2021. AAPI women were more than twice as likely to report hate incidents as men. And these incidents, which range from verbal harassment to civil rights violations to physical assault, “represent only a fraction of the number of hate incidents that actually occur,” a Stop AAPI Hate report said.

Advocates attribute the rise of hate and harassment of Asian Americans to the increasingly xenophobic language connecting the COVID-19 pandemic with Asian Americans. In reality, AAPI individuals are suffering under the pandemic, especially Asian American women.

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Amazon’s anti-union campaign is part of a long history of employer opposition to organizing: Passing the PRO Act would be a critical first step

Today ends a seven-week union election voting period for workers at the Amazon fulfillment center in Bessemer, Alabama. If workers win a union, the results of the election will further energize the labor movement. If Amazon’s efforts at union avoidance prove successful, the election will serve as the most recent example of employers thwarting workers’ efforts to organize a union. Regardless of the outcome of the election, the coercion, intimidation, and retaliation workers at Amazon’s Bessemer facility have endured reveal a broken union election system.

Unfortunately, their experiences are far from unique—employers are charged with violating the law in 41.5% of all union elections supervised by the National Labor Relations Board (NLRB). The numbers are worse for large employers, like Amazon, where more than half (54.4%) of employers are charged with violating the law.

We have only to look to the recovery from the Great Recession to know that reforming this system is critical to an equitable recovery now. Even though the unemployment rate ultimately got down to 3.5% in the recovery from the Great Recession, low- and middle-wage workers did not get a fair share of that economic growth. If policymakers do not address our nation’s broken labor law system, then they will be the architects of an economy marked by continued inequality and injustice. This moment is an opportunity to prioritize policies that enable working people to have agency over their working lives and win both economic and democratic reforms for themselves and their co-workers.

The Protecting the Right to Organize (PRO) Act addresses many of the major shortcomings with our current law. Specifically, it would institute meaningful penalties for private-sector employers that coerce and intimidate workers seeking to unionize—as has been clearly documented in the Amazon organizing campaign in Bessemer.

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One year later, unemployment insurance claims remain sky-high

One year ago this week, when the first sky-high unemployment insurance (UI) claims data of the pandemic were released, I said “I have been a labor economist for a very long time and have never seen anything like this.” But in the weeks that followed, things got worse before they got better—and we are not out of the woods yet. Last week—the week ending March 20, 2021—another 926,000 people applied for UI. This included 684,000 people who applied for regular state UI and 242,000 who applied for Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.

Last week was the 53rd straight week total initial claims were greater than the second-worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims are still greater than the 14th worst week of the Great Recession.)

Figure A shows continuing claims in all programs over time (the latest data for this are for March 6). Continuing claims are currently nearly 17 million above where they were a year ago, just before the virus hit.

Figure A

Continuing unemployment claims in all programs, March 23, 2019–March 6, 2021: *Use caution interpreting trends over time because of reporting issues (see below)*

Date Regular state UI PEUC PUA Other programs (mostly EB and STC)
2019-03-23 1,905,627 31,510
2019-03-30 1,858,954 31,446
2019-04-06 1,727,261 30,454
2019-04-13 1,700,689 30,404
2019-04-20 1,645,387 28,281
2019-04-27 1,630,382 29,795
2019-05-04 1,536,652 27,937
2019-05-11 1,540,486 28,727
2019-05-18 1,506,501 27,949
2019-05-25 1,519,345 26,263
2019-06-01 1,535,572 26,905
2019-06-08 1,520,520 25,694
2019-06-15 1,556,252 26,057
2019-06-22 1,586,714 25,409
2019-06-29 1,608,769 23,926
2019-07-06 1,700,329 25,630
2019-07-13 1,694,876 27,169
2019-07-20 1,676,883 30,390
2019-07-27 1,662,427 28,319
2019-08-03 1,676,979 27,403
2019-08-10 1,616,985 27,330
2019-08-17 1,613,394 26,234
2019-08-24 1,564,203 27,253
2019-08-31 1,473,997 25,003
2019-09-07 1,462,776 25,909
2019-09-14 1,397,267 26,699
2019-09-21 1,380,668 26,641
2019-09-28 1,390,061 25,460
2019-10-05 1,366,978 26,977
2019-10-12 1,384,208 27,501
2019-10-19 1,416,816 28,088
2019-10-26 1,420,918 28,576
2019-11-02 1,447,411 29,080
2019-11-09 1,457,789 30,024
2019-11-16 1,541,860 31,593
2019-11-23 1,505,742 29,499
2019-11-30 1,752,141 30,315
2019-12-07 1,725,237 32,895
2019-12-14 1,796,247 31,893
2019-12-21 1,773,949 29,888
2019-12-28 2,143,802 32,517
2020-01-04 2,245,684 32,520
2020-01-11 2,137,910 33,882
2020-01-18 2,075,857 32,625
2020-01-25 2,148,764 35,828
2020-02-01 2,084,204 33,884
2020-02-08 2,095,001 35,605
2020-02-15 2,057,774 34,683
2020-02-22 2,101,301 35,440
2020-02-29 2,054,129 33,053
2020-03-07 1,973,560 32,803
2020-03-14 2,071,070 34,149
2020-03-21 3,410,969 36,758
2020-03-28 8,158,043 0 52,494 48,963
2020-04-04 12,444,309 3,802 69,537 64,201
2020-04-11 16,249,334 31,426 216,481 89,915
2020-04-18 17,756,054 63,720 1,172,238 116,162
2020-04-25 21,723,230 91,724 3,629,986 158,031
2020-05-02 20,823,294 173,760 6,361,532 175,289
2020-05-09 22,725,217 252,257 8,120,137 216,576
2020-05-16 18,791,926 252,952 11,281,930 226,164
2020-05-23 19,022,578 546,065 10,010,509 247,595
2020-05-30 18,548,442 1,121,306 9,597,884 259,499
2020-06-06 18,330,293 885,802 11,359,389 325,282
2020-06-13 17,552,371 783,999 13,093,382 336,537
2020-06-20 17,316,689 867,675 14,203,555 392,042
2020-06-27 16,410,059 956,849 12,308,450 373,841
2020-07-04 17,188,908 964,744 13,549,797 495,296
2020-07-11 16,221,070 1,016,882 13,326,206 513,141
2020-07-18 16,691,210 1,122,677 13,259,954 518,584
2020-07-25 15,700,971 1,193,198 10,984,864 609,328
2020-08-01 15,112,240 1,262,021 11,504,089 433,416
2020-08-08 14,098,536 1,376,738 11,221,790 549,603
2020-08-15 13,792,016 1,381,317 13,841,939 469,028
2020-08-22 13,067,660 1,434,638 15,164,498 523,430
2020-08-29 13,283,721 1,547,611 14,786,785 490,514
2020-09-05 12,373,201 1,630,711 11,808,368 529,220
2020-09-12 12,363,489 1,832,754 12,153,925 510,610
2020-09-19 11,561,158 1,989,499 10,686,922 589,652
2020-09-26 10,172,332 2,824,685 10,978,217 579,582
2020-10-03 8,952,580 3,334,878 10,450,384 668,691
2020-10-10 8,038,175 3,711,089 10,622,725 615,066
2020-10-17 7,436,321 3,983,613 9,332,610 778,746
2020-10-24 6,837,941 4,143,389 9,433,127 746,403
2020-10-31 6,452,002 4,376,847 8,681,647 806,430
2020-11-07 6,037,690 4,509,284 9,147,753 757,496
2020-11-14 5,890,220 4,569,016 8,869,502 834,740
2020-11-21 5,213,781 4,532,876 8,555,763 741,078
2020-11-28 5,766,130 4,801,408 9,244,556 834,685
2020-12-05 5,457,941 4,793,230 9,271,112 841,463
2020-12-12 5,393,839 4,810,334 8,453,940 937,972
2020-12-19 5,205,841 4,491,413 8,383,387 1,070,810
2020-12-26 5,347,440 4,166,261 7,442,888 1,450,438
2021-01-02 5,727,359 3,026,952 5,707,397 1,526,887
2021-01-09 5,446,993 3,863,008 7,334,682 1,638,247
2021-01-16 5,188,211 3,604,894 7,218,801 1,826,573
2021-01-23 5,156,985 4,779,341 7,943,448 1,785,954
2021-01-30 5,003,178 4,062,189 7,685,857 1,590,360
2021-02-06 4,934,269 5,067,523 7,520,114 1,523,394
2021-02-13 4,794,195 4,468,389 7,329,172 1,437,170
2021-02-20 4,808,623 5,456,080 8,387,696 1,465,769
2021-02-27 4,457,888 4,816,523 7,616,593 1,237,929
2021-03-06 4,458,888 5,551,215 7,735,491 1,207,201

 

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The data below can be saved or copied directly into Excel.

Economic Policy Institute

Caution: Trends over time in PUA claims may be distorted because when an individual is owed retroactive payments, some states report all retroactive PUA claims during the week the individual received their payment.

Click here for notes.

Data are not seasonally adjusted. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.

Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), https://oui.doleta.gov/unemploy/docs/persons.xls and https://www.dol.gov/ui/data.pdf, March 25, 2021.

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The good news in all of this is Congress’s passage of the sweeping $1.9 trillion relief and recovery package. It is both providing crucial support to millions of working families and setting the stage for a robust recovery. One big concern, however, is that the bill’s UI provisions are set to expire the first week in September, when, even in the bestcase scenario, they will still be needed. By then, Congress needs to have put in place long-run UI reforms that include automatic triggers based on economic conditions.