March 2, 2021

Economix Blog: Job Openings Rise, but Unemployment Stays High



Dollars to doughnuts.

The Labor Department has released its latest report on job openings and labor turnover today, which showed that job vacancies were at their post-recession high in February. But we still have a strangely high unemployment rate relative to the job openings rate, at least when compared with the relationship these two variables had before the recession began.

Source: Bureau of Labor Statistics, Current Population Survey and Job Openings and Labor Turnover Survey, April 9, 2013.Bureau of Labor Statistics Source: Bureau of Labor Statistics, Current Population Survey and Job Openings and Labor Turnover Survey, April 9, 2013.

The chart above is the Beveridge Curve, named for the British economist William Henry Beveridge. It shows the relationship between the unemployment rate and the job openings rate. As I also explained in an earlier post, during an expansion the jobless rate is low and the job vacancy rate is high; a small share of workers are looking for jobs, and so when employers post a vacancy, the opening can be hard to fill (or alternately, if there are a lot of jobs available, people will not have much trouble finding work, leading to low unemployment).

In a recession, the reverse is true: there is a high unemployment rate and a low vacancy rate. Where you end up on the curve generally depends on where you are in the business cycle, but you will probably be somewhere on or near that line.

Since late 2009, though, the Beveridge Curve has shifted outward. That means that even though today’s job market is not great, there are still more vacancies out there than the unemployment rate alone would have predicted a few years ago.

It’s not clear why that’s the case, but the answer probably involves some combination of skill mismatch; whether all the people who are calling themselves unemployed today might have done so in previous years; and hiring paralysis at firms that have vacancies but are afraid of making a hiring mistake in a still-uncertain economy.

One of the bright spots in today’s Labor Department’s report was that the quits rate (the number of people quitting divided by total employment) held steady at the peak for the recovery period so far. Janet Yellen, vice chairwoman of the Federal Reserve, recently said that she was looking for a pickup in the quits rate as a “signal that workers perceive that their chances to be rehired are good — in other words, that labor demand has strengthened.”

Layoffs and discharges remain quite low; the problem in the job market remains too little hiring, not too much firing.

Here’s a look at the ratio of quits to layoffs/discharges, which as you can see has been generally rising in the last four years:

Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, April 9, 2013. Note: Shaded area represents recession as determined by the National Bureau of Economic Research.Bureau of Labor Statistics Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, April 9, 2013. Note: Shaded area represents recession as determined by the National Bureau of Economic Research.

The ratio peaked in August 2006, when there were 1.8 people quitting their jobs for each person laid off or discharged. It fell to 0.7 in April 2009, near the end of the recession, and is now about 1.4.

Article source:

Economix Blog: For Graduates, a Shrinking Payoff

Attention recent college graduates — as well as parents who covered those big tuition bills. You may not want to hear this, but a study released on Wednesday found that entry-level wages for students who graduated from college in 2010 was lower than a decade earlier, after adjusting for inflation.

The study was done by Heidi Shierholz, a labor market economist at the Economic Policy Institute, a liberal research and policy center. She found that after gains in the 1980s and 1990s, entry-level hourly wages for college-educated men (without advanced degrees) were $21.77 in 2010, down 4.5 percent from $22.75 in 2000. For college-educated women, entry-level wages were $18.43 in 2010, the study found, down 5.2 percent from $19.38 10 years earlier. (The figures are in 2010 dollars.)

Source: Economic Policy Institute, based on analysis of Current Population Survey, Outgoing Rotations Group

Ms. Shierholz said in an interview, “We’re seeing increased demand for college grads, but the fact that we see these declining wages suggests that demand is being more than met by the increased supply of college grads.”

She said that in the decade after 2000, the business cycle was tough on workers and wages across the board, except for those at the very top. “These young people coming out of college get swooped up in the bottom part of the wage distribution that really suffered during the whole decade after 2000,” she said.

Her study concluded on a pessimistic note: “With unemployment expected to remain above 8 percent well into 2014, it will likely be many years before young college graduates — or any workers — see substantial wage growth.”

Article source:

Economix: The Two-Track Recovery (or ‘Depression’?)

Despite what the gross domestic product report released Thursday shows, nearly a third of Americans believe the country is in a depression, according to a new Gallup poll.

The poll, conducted April 20-23, found that 29 percent of Americans thought the economy was in a depression, and an additional 26 percent thought it was in a recession.

The recession technically ended nearly two years ago, according to the Business Cycle Dating Committee of the National Bureau of Economic Research. Some of the disconnect between expert and popular views may be due to semantics. To economists, the words “recession” and “expansion” refer to a change in economic activity — that is, which direction is the economy moving in. But most laypeople who hear these terms probably think of the level of economic activity — that is, does the economy feel healthy or not.

But even if we take the poll responses to mean “is the economy healthy” (or some variant of that concept), the responses still warrant further digging.

It turns out the people most likely to say the economy is “growing,” and the least likely to say the economy is in a “depression,” are the wealthy. Poor Americans are twice as likely to think the economy is in a depression as the rich are:


This makes sense: Rich people have seen more improvements than the poor in the last few years, considering factors like the rise in the stock market (which primarily benefits wealthier Americans) and the surge in commodity prices (which disproportionately hurt the poor).

They say all politics is local; perhaps all economics is, too.

Article source: