Employment Is Still in Need of a JOLT
This repost from Mark Thoma (original comes from Julie Hotchkiss at the Atlanta Fed) has drawn a few reactions from around the web (here are Matthew Yglesias and Brad DeLong).
The following graph uses the same JOLTS data. However, instead of layoffs, total separations (which include quits and other reasons for leaving a job) are used. The graph shows that the labour market suffered quite a bit during the recession, perhaps even more than what most economists have been saying.
The H-S ratio represents the hire levels over the separation levels – in the graph the axis crosses at 1.00 where hiring equals separations (in other words, 0.10 is equal to 1.10 while 0.00 is actually equal to 1.00). The positive deviations from 1.00 are interpreted as an expanding labour market; the opposite is applicable for negative deviations.
Link to a clearer version of the graph
Looking at the trends, it seems as though the H-S ratio leads employment (y/y %) growth by a few months. The H-S ratio shows that the total number of separations has been far greater than the hiring levels during the recession. It means that the labour recovery (return to a natural rate of unemployment) could be long and painful. First, filling up the gaps (negative H-S ratio deviations) to stop the unemployment rate from rising; second, more jobs (hence, more funding) are needed to help unemployed come back down. Not as easy as it sounds.
Employment is very weak and deficit is falling… not a good start.
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