JOLTS: The Labor Market Is Far From Normal

The headline analysis of the labor market (JOB OPENINGS AND LABOR TURNOVER or JOLTS) says there was little change in the dynamics in March 2011.

There were 3.1 million job openings on the last business day of March, the U.S. Bureau of Labor Statistics reported today. The job openings rate (2.3 percent) was unchanged over the month, following a gain in February. The hires rate (3.1 percent) and the separations rate (2.9 percent) also were unchanged in March.

At this point we have the April 2011 jobs report (analysis here) so this data is very “rear view mirror” – we know there was a substantial improvement in at least the growth rate.  But one good month’s job growth is not a trend and we need to analyze trends.

One big problem with the headline data is that it provides no historical perspectives.  The JOLTS database goes back only to 2000.

Job openings (unfilled job openings) is trending upward solidly – but still well under relatively more “healthy” periods.

But, these added job openings are not yet creating real jobs.  The graph below shows hiring.  Note how relatively weak hiring is in a historical perspective.

Still we know that there is positive jobs growth against population growth.  The reason is that separations (either people quitting or being laid off) are also historically low.

What JOLTS is telling me is that there is a new normal dynamic of low labor openings and equally low separations for the foreseeable future.  Jobs are being created above the population growth rates – and that is a much better situation than the USA was in a year ago.

Note:  The decline in the WIUC (weekly initial unemployment claims) to less than 400,000 per week earlier in 2011 corresponds to the decline in total separations in the graph above.  More recently the total separations has risen to levels last seen at the beginning of the year and WIUC has risen back above 400,000.

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