Secret Information from the Bureau of Labor Statistics

Each month the Bureau of Labor Statistics (BLS) issues a report on the Job Openings and Labor Turnover Survey (JOLTS). This document is loaded with interesting facts that no one seems to know.

It is not really classified "Top Secret" but it might as well be. There was zero media coverage yesterday and a Google search shows nothing from blogs or MSM.

Here are some interesting data from the last business day in June, the date covered in the questions. We note that while this has a "June handle" the information is only a couple of weeks different from the widely followed July employment situation report. The latter survey is based on mid-month information.

Key facts you probably did not know:

• At the end of June there were about 2.5 million job openings nationwide;
• During June there were 3.8 million new hires;
• 1.8 million people quit their jobs (seasonally adjusted);
• There were 2.5 million involuntary separations.

The reality? These numbers are all terrible! They are a bit off the worst levels from two months ago, but still very bad. People underestimate labor dynamics.

The conclusion is important, just as we wrote in April.

Implications

The facts are poorly understood. You do not see them on CNBC, in the MSM, or on blogs. Our guess is that few pundits could guess any of these numbers. It is a neglected subject.

Our guess is that the leading pundits are essentially unware of any of these facts and could not guess the numbers within an order of magnitude. People think that there are no jobs, that no one is quitting and that no one is getting hired. They also vastly underestimate new job creation, which is significant, even in a recession.

The key point is the massive shift in employment -- something that is always going on. If one thinks about this, the arguments about the bete noir of bloggers, the birth/death adjustment, is seen in a better perspective.

There are always millions of people quitting and getting fired. Millions of others are getting hired.

The story is very negative. If you consider the number of people losing jobs, and needing to search for new ones, it dwarfs the actual unemployment rate. Many people are worried about their jobs, and rightly so. No wonder sentiment is so negative!

There is much more focus on job losses than new jobs. The former get the news stories. The latter are basically unreported.

And most importantly ---

The market fixation on net job changes ignores the much larger picture of employment dynamics.

Comments

[Nick36]

I'm not sure how you can say that shifting of workers from one job to another is either good or bad, unless you know whether these workers are shifting from higher paid jobs to lower paid jobs or the reverse.

And which way the workers are shifting isn't obvious from the statistics you've quoted.

2009 Aug 13 08:01 AM

[mekats]

Only by showing the trend in each of the categories (openings, new hires, separations, quitters) cited could one begin to draw any reasonable conclusions. Pronouncing good or bad by viewing absolute levels in a vacuum seems shortsighted.

2009 Aug 13 08:09 AM

[perceptions_now]

I'm sure someone will correct me, if I am wrong, but whilst there were jobs created, as there were even at the height of the Great Depression, the problem is there were not enough jobs created.

As clarification, the 2.5 million involuntary separations, is that nearly the same as saying YOUR SACKED?

2009 Aug 13 08:15 AM

[enigmaman]

You would have been more effective in getting your point across by including the stats for why, as you say "The reality? These numbers are all terrible!"

Currently economic information provide by main stream media has been confined to attention grabbing headlines " housing sales surge", however when you dig into the details you find a very mixed message, not all that positive

Ive said before " where will all the needed jobs come from" when you look at the economy and how businesses have contracted, they will be slow to rehire and expand because the all important consumer will be operating on a " Needs only" basis.

Additional information about the stats you highlight would go a long way in shedding light on the very cloudy issue of " Where will the needed jobs come from"

2009 Aug 13 08:19 AM

[Donald Ingram]

What stats you have listed is just the 'froth' on top of the soup.
To draw any concrete conclusions, the sub-categories, along with attached demographics must be demonstrated.
All this 'froth' does not alter the fact that the REAL unemployment rate is somewhere between 16% & 22 %, with no chance of a recovery until these numbers improve.

2009 Aug 13 10:25 AM

[Gregman2]

This tells little about the character of those jobs and nothing about impacts on real wage earnings. You're right to note that this is overlooked, but it seems incomplete the way you're outlining this.

2009 Aug 13 11:23 AM

[John Lounsbury]

Jeff - - -

I think I know exactly why you wrote this article. I believe you are attempting to give some insight to people who have been commenting things like "there can't be 2 million jobs created" if the job losses are 300,000. I think most of the commenters did not recognize your objective. Of course, if I'm attributing the wrong motive, feel free to slam me.

2009 Aug 13 11:57 PM

[Jeff Miller]

John -- You are completely correct. I am trying to help people see that there is plenty of job creation at the worst of times. I am also attempting to make clear that it is still a time of distress for many millions of workers. Both the magnitude and duration of unemployment are at high levels.

I have written many employment articles, and I cannot assume that readers are familiar with all. I also cannot cover every topic in each article.

I needed to be clearer in this one, but I am delighted that some readers are now focused on labor force dynamics.

Thanks for your helpful comment.

Jeff


On Aug 13 11:57 PM John Lounsbury wrote:

> Jeff - - -
>
> I think I know exactly why you wrote this article. I believe you
> are attempting to give some insight to people who have been commenting
> things like "there can't be 2 million jobs created" if the job losses
> are 300,000. I think most of the commenters did not recognize your
> objective. Of course, if I'm attributing the wrong motive, feel
> free to slam me.

2009 Aug 14 12:13 AM

[Jeff Miller]

Thanks for the suggestion. I'll try to do another piece with some time series data.

Jeff


On Aug 13 08:19 AM enigmaman wrote:

> You would have been more effective in getting your point across by
> including the stats for why, as you say "The reality? These numbers
> are all terrible!"
>
> Currently economic information provide by main stream media has been
> confined to attention grabbing headlines " housing sales surge",
> however when you dig into the details you find a very mixed message,
> not all that positive
>
> Ive said before " where will all the needed jobs come from" when
> you look at the economy and how businesses have contracted, they
> will be slow to rehire and expand because the all important consumer
> will be operating on a " Needs only" basis.
>
> Additional information about the stats you highlight would go a long
> way in shedding light on the very cloudy issue of " Where will the
> needed jobs come from"

2009 Aug 14 12:14 AM

[Schweizer]

Do you plan to explain how your estimate (and others) were so far off in July? It would be helpful. It would be nice to know if the BLS fudged or that your model did not take something into account. Any preview for August?

Thanks Jeff

2009 Aug 14 07:08 AM

[John Lounsbury]

Schweizer - - -

Jeff can speak for himself, but I was taken by surprise by the drop in the labor force. I have written on this in several articles and I'm still doing analysis. There is at least one more article coming.

Basically, what has happened is the labor force total dropped the past two months. For the July report, the labor force declined by 422,000. I had never anticipated such a large number. In fact, I had expected the labor force to increase because there had been a smaller decline in June, which I expected to be reversed, and because new graduates were entering the labor force. The later effect would probably have been muted by seasonal adjustments, but certainly should not have had a subtractive effect.

If the labor force had remained unchanged from June, the U-3 unemployment rate would have been 9.6%, instead of the 9.4% officially reported. If the July labor force had been the same as May, July unemployment would have been 9.7%.

My hours worked based unemployment rate ("U-7") would have been 14.8% using the June labor force number and 15.0% using the May labor force.

2009 Aug 14 11:49 AM