Jobs Report Round-up

March 7th, 2014 at 12:50 pm

Me old mate Heidi Shierholz has a neat table showing the ratio of unemployment rates from today’s report to those of 2007.  What I found revealing was the absence of an obvious pattern among the jobless ratios across age, occupation, education, race, and so on.  That suggests, as Heidi underscores, that it’s pervasive weak demand, not skills shortages driving the jobless rate.  If the latter were as big a deal as some people say, you’d see lower ratios among more highly educated workers and differences between higher pay/skilled occupations and lower ones.

While Heidi correctly notes that overall average wage growth has been flat, over at the NYT Economix blog I point out that if you look at middle-wage workers, there’s a bit of an acceleration going on.  At the same time, inflation is decelerating.  Inflation hawks: draw in your talons.  This wage trend is a good one that should be nurtured, not stomped on!

Dean Baker notes this trend as well, and, getting back to the false skills shortage claims, points out that “…less educated workers seem to be doing somewhat better in the current economy, the opposite of the skills shortage view…”  (BTW, these observations should not be taken to imply that every employer everywhere can immediately find the worker they seek at the wage they want to pay…but re that, see this.)

The White House has two neat charts showing weather impacts.  As I suggested earlier, the tick down in average weekly hours looks to be a function of a lot of weather-related work-schedule disruptions.  (They’ve also got an interesting look at what they call volatility of monthly job gains or losses, and tout positively its low level…hmmm…I’m not sure why this doesn’t just confirm we’re slogging along with steady but only moderate employment gains.  Plot this metric over history and it’s consistently higher in expansions with strong job growth.  And I think most of us would trade-off higher variance for larger average gains.)

Finally, my CBPP colleague Chad Stone importantly emphasizes the persistence of elevated long-term unemployment even as Congress has allowed extended benefits to elapse:

Long-term unemployment remains a significant concern.  Nearly four of every ten (37.0 percent) of the 10.5 million people who are unemployed — 3.8 million people — have been looking for work for 27 weeks or longer.  That’s a jump of 203,000 in February.  These long-term unemployed represent 2.5 percent of the labor force.  Before this recession, the previous highs for these statistics over the past six decades were 26.0 percent and 2.6 percent, respectively, in June 1983, early in the recovery from the 1981-82 recession.  By the end of the first year of the recovery from that recession, however, the long-term unemployment rate had dropped below 2 percent.

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7 comments in reply to "Jobs Report Round-up"

  1. Robert Buttons says:

    Romer, et al (“The job impact of the American Recovery and reinvestment Act”, 2009) predicted, even WITHOUT the stimulus, unemployment would be ~5% by 2014Q1. Was the paper flawed or was the stimulus, in fact, toxic?


  2. Nathan Kerr says:

    In one of my reviews (at http://www.MBAissues.com) of your book about full employment, you (or your co-author) admit that long term unemployment “insurance” (welfare after 26 weeks) induces people not to find work or to be overly selective in what they are “willing” to do for work. This is correct and an area of agreement. (Note that the latest job numbers show people back in the labor market actually looking for work thus the reason unemployment ticked up.) Yet you still deride Congress for cutting of the proverbial government “teet”. Here is the quote from your book (an interesting read by the way!):

    “It could also be the case that workers are being more selective about the jobs they are willing to accept. Due to the severity of the downturn, the duration of unemployment benefits has been considerably longer in this downturn than in prior postwar recessions. As a result, the long-term unemployed are far more likely to still be collecting benefits than would otherwise be the case, taking advantage of the opportunity to wait longer to find a job that fully utilizes their skills. Recent research has found a limited amount of evidence that the increased duration of benefits has caused people to be unemployed somewhat longer, although this effect does not appear to be large (see Rothstein 2011; Daly et al. 2011). At the point where unemployed workers are no longer eligible for benefits, most give up looking for work and drop out of the labor force; they do not suddenly find jobs. Given this pattern, the main way in which longer benefits lead to a higher unemployment rate is by keeping people in the labor force looking for jobs and therefore counted as unemployed (you must be looking for work to be counted as unemployed and to qualify for benefits). It does not appear that the longer period of benefit duration has caused large numbers of workers to turn down jobs they would have otherwise accepted.”


    • smith says:

      The book and this blog support extended unemployment benefits based on careful studies, but one can easily make a good argument for extended benefits based on common sense.

      First the studies
      http://www.frbsf.org/economic-research/files/el2013-03.pdf
      “The unprecedented extension of unemployment insurance (UI) benefits up to 99 weeks from 2009 through mid-2012 appears to have lengthened duration by a small to moderate amount (Rothstein 2011, Daly et al. 2012).”

      What’s a small to moderate amount?

      http://www.brookings.edu/~/media/Projects/BPEA/Fall%202011/2011b_bpea_rothstein.PDF
      Rothstein finds a .1 to .5% rise in unemployment due to the extension, but half of that is just because they stay active or are listed as active in the job market. So it’s a .05 to .25 effect. .1% of the labor pool is 150,000, .25% is 250,000, and being there were 1.3 million on extended benefits, nearly 80 to 90% are not “induced” to delay or be more selective. The 10 to 20% who delay represent a “significant” amount from a statistical sense, but that obviously doesn’t make a good case for ending the extension since 80 to 90% benefit without negative effects.

      Another paper has a higher estimate of .8% vs. the .5%, though it footnotes another paper with a .3% figure. Then again the .8% paper also argues for structural unemployment, denying strong evidence against structural employment (structural meaning mismatch of skills as opposed to lack of demand in all sectors and occupations) I’d thus tend to discount the higher effect.
      http://www.frbsf.org/economic-research/files/wp11-05bk.pdf

      So just because there are some small negative side effects which are acknowledged doesn’t mean the medicine is no good.

      But again, it’s kind of common sense if the job market is worse than usual, it takes longer than usual to find a job, unemployment benefits should be extended.

      Of course you can even find some papers that claim extended unemployment caused the great recession and the attendant unemployment.
      http://www.nber.org/papers/w19499
      This contradicts the strong support for the concept of extended benefits from this blog and elsewhere http://www.nytimes.com/2002/12/15/us/bush-calls-for-an-extension-of-unemployment-benefits.html
      There are also papers questioning global warming, evolution, and the effectiveness of fiscal stimulus in a depression, but you won’t see those positions supported by this blog either.


      • Nathan Kerr says:

        MR. Smith- Please do not confuse unemployment insurance (welfare after 26 weeks) being extended for up to initial 99 weeks (nearly two years!) as un-needed in the initial crisis that ensued. However, the left who have it no other way then keep extending them for political gain just as the right is against paying a meaningful wage for political gain. Why can we not find a happy medium?


  3. Ray in Bowie says:

    Jared-
    What would the Unemployment Rate be with historical government (ratio of Govt workers/population) employment levels? Aren’t we talking +/- 1M more jobs? Isn’t this recovery the only one which hasn’t included government employment as part of the rebound?


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