Are all jobless recoveries alike?
On Tuesday, the BLS released information on job openings, hires, and separations in April as reported in the Job Openings and Labor Turnover Survey. The job openings rate (the number of aggregate vacancies divided by total employment plus vacancies) decreased to 2.5% from 2.7% and the rate of hires (total hires divided by total employment) also decreased to 3.1% from 3.3%; two signs that the labor market is still having a difficult time recovering.
The JOLTS survey provides a more complete view of what comprises changes in total employment reported in the Employment Situation. The relationship between job openings and vacancies tells us to what extent employment growth is being affected by labor demand. If job openings and hires are growing at the same rate, then the counter-factual would be that hires could grow even faster if only there were more demand (job openings). Payroll employment increased by 77,000 in April (revised down from 115,000), a number that was seen to be far away from what is needed to bring the unemployment rate back down to pre-recession levels, and the numbers today highlight a little what is behind the constantly weak employment reports.
As we do elsewhere in the blog, the graphs below compare the path of both job openings and hires in the 2001 cycle versus the current one from the peak. Data only permits looking at the last two cycles, both of which have been characterized as having a particularly slow recovery in employment (popularly coined ‘Jobless Recoveries’). Looking at JOLTS openings and hires, both of these series seem to track each other fairly closely, at least from the peak. In this regard, one would be led to believe that whatever mechanism is causing the slow response of employment must have been present in both cycles, or that all jobless recoveries are made alike.