Jobs Report Paints A Misleadingly Rosy Picture Of The Labor Force
Despite the falling unemployment rate, Americans are still feeling pessimistic about the economy.
According to a recent study conducted by the Pew Research Center, 65 percent of people say jobs in their community are difficult to come by — down from the terrible levels seen in the beginning of 2000, but still far above the pre-economic crisis levels.
Only 27 percent of Americans believe there are a healthy number of jobs in the labor market.
Pew researchers noted that the disconnect between the declining unemployment rate (now standing at 6.3 percent) and the public’s depressed attitude is a testament to the unemployment number’s inability to depict a full and accurate picture of the labor force.
In part, the unemployment number is misleading because it does not account for all of the people who have given up on the job search and are therefore no longer counted as being part of the labor market.
Further, the jobs report does not detail the dynamics of the labor economy. Meaning, it does not talk about vacancies, hires, voluntary quits, and firings.
However, the monthly Job Openings and Labor Turnover Survey (JOLTS) illustrates how employers and employees experience the job market, by offering estimates of vacancies, hires, voluntary quits and firings.
Unlike the government’s jobs report, JOLTS figures paint a picture of an economy that is still struggling to recover from the recession and regain a robust pre-economic crisis job market.
The latest JOLTS numbers (from February) show that hiring has been relatively flat for an extended period of time. February’s seasonally adjusted hiring rate was 3.3 percent, showing no improvement since October of last year.
Prior to the recession, hiring typically remained stable — at or near 4 percent.
On a more positive note, quit rates — the number people who voluntarily leave their jobs as a percentage of total employment — have improved slightly since the height of the recession. However, at 1.7 percent, they are still below the pre-crisis rate of 2 percent or higher.
Typically, the quit rate is a good indicator of how confident people feel about leaving their job for better employment prospects.
Job opening have recovered since 2010 levels, but there is still an unusually high number of demoralized job-seekers compared to the number of available jobs.
Pew researchers explain that this atypical trend is due to the high number of long-term unemployed individuals.
As of April, nearly 3.5 million people (35.1 percent of all unemployed) had been out of work for over 26 weeks.
There are several theories explaining the continual long-term joblessness: lack of incentive to work due to extending unemployment benefits; inability to match a worker’s skills to an appropriate job; lack of efficiency in the labor market; and workers living in areas with few employment opportunities.
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