July 13, 2024

Off the Charts: Adding to Jobless Woes, Little Turnover in the Workplace

The Bureau of Labor Statistics reported this week that the rate of discharges and layoffs rose a little in May, to 1.27 percent of the work force. But the rate, which reached a record low of 1.11 percent in January, remains lower than it was for most of the last decade.

Unfortunately, hiring also remains very slow, although it has improved a little in recent months from the lows reached during the depths of the recession and credit squeeze.

In normal times the American labor market is characterized by a strong level of turnover; more than 4 percent of all jobs change hands each month. But that turnover rate plunged during the recession and has barely started to recover, as can be seen from the accompanying charts.

The low turnover rate is probably one reason long-term unemployment has become a major problem. Most job openings occur because employees resign, presumably because they find a better job or believe they will be able to do so. The vacated jobs are available to be filled, perhaps by people who had been unemployed.

Presumably the number of employees unhappy with their current jobs has not declined, but over the most recent 12 months, 13 million fewer people quit jobs than did so during the year before the recession began at the end of 2007. Many of those who did not resign may be unhappy and frustrated that they are not able to change jobs.

The decline in the number of people switching jobs may be partly a result of the collapse in housing prices. There are no doubt some workers who would like to change jobs and who could get better ones if they were willing to move. But with many homes no longer worth the amount owed on them, a move could be much more difficult than it would have been when real estate prices were higher.

The figures are gathered by the Labor Department through the Job Openings and Labor Turnover Survey, known as Jolts. That survey began in 2000, so there is a limited amount of history. The survey comes out more than five weeks after the overall jobs numbers are released, so it normally gets little attention.

It is possible that the slow level of turnover in the labor market has distorted the normal jobs report. In June, the government reported that total employment rose by 376,000, but that after the seasonal adjustment the increase was a disappointing 18,000. This year, much as in 2010, the job market has appeared to strengthen early in the year and then fade in the spring and summer.

But if reduced turnover means there is less hiring during the months when employers are usually adding temporary help, and fewer job losses in months that are seasonally weak, that could mean the seasonal adjustments are currently overstated. The seasonal adjustments add the most jobs during the winter months of January, February and March and subtract the most during the summer months of June, July and August.

If that is true, then the job picture was neither as good as it appeared in the winter nor as bad as it has looked over the last two months.

Floyd Norris comments on finance and the economy in his blog at nytimes.com/norris.

Article source: http://feeds.nytimes.com/click.phdo?i=cc680319a19488457cec9193b4159786

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