The New Normal Paradox: All The Job Gains With Half The Hiring?

Tyler Durden's picture

While everyone obsesses over the monthly payrolls report, which on a trailing 12 month basis is once indicating the creation of roughly 2 million jobs each year, or roughly where it was before the crisis (red line chart below), one aspect that is largely ignored is the amount of hiring.

Why is hiring important?

Because that is the actual process by which those without a job end up with a job. And as we just learned today after the latest JOLTS release, which showed that there were over 4 million job openings (4,001 to be precisely) for the first time since 2008, a far more important number is the update on Hires which at 4.5 million barely changed from last month, but more importantly, is barely a fraction of where it should be based on the number of job gains reported by the BLS monthly. The chart below confirms this stunning discrepancy: a surge in jobs with barely half the pre-recession hiring?

 

How does one explain this discrepancy in which the US economy supposedly is growing at its historic peak pace while hiring is at half the peak pace? Simple: the gains in nonfarm payrolls are due a decline in layoffs and other separations, not an increase in hirings: i.e., normal labor demand driven growth.

Which means that anyone hoping for a brisk increase in wages, i.e. worker leverage, is in for a prolonged shock.

The chart above simply shows that the leverage is and continues to be with the employers - instead of letting people go (or workers quitting at their volition) at anything close to a traditional pace, employers have a huge bargaining chip - a job. Because if a worker does not want to perform a job, tough: there are about 3 people willing to fight for every job opening. It also means that those who lose their job will find it doubly more difficult time to reenter the workforce as there simply is not enough hiring.

Which means that wage deflation, at least among prevailing jobs, will continue leading to declining real disposable income, a declining in personal savings and the continued use of "student loans" (since credit card deleveraging continues) to fund everyday lifestyles, at least until such time as the hiring trend has normalized.

The really bad news: while such a normalization will eventually happen, according to our back of the envelope calculations, it will take place some time in... 2020.

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LawsofPhysics's picture

When you're a fascist and the current metrics don't support your current meme, you simply change the equation by which those metrics are calculated.

Same as it ever was...

moonman's picture

It's called public school teacher

I am more equal than others's picture

 

 

 

The coming gap collapse.  It will be beautiful.  Magnificent.  Stupendous.  

Say What Again's picture

I've acquired a few good drones and robots to do all my menial work.

Say What Again's picture

Hey Boris,

What do the folks in the ukraine drink when working?

qqqqtrader's picture

I'm still trying to figure out the unemployment numbers they posted a few days ago. Let me see if I can get a grip on those unemployed numbers. This month they revised the seasonal numbers for 2 months ago and gave us that seasonal number this month to calculate last month’s numbers. The seasonal adjustment for last month was different from a year ago because of ± weather conditions (and other factors) and holidays (?) and possibly a revised YoY seasonal adjustment revised number. You still with me? OK, you looked confused for a bit. These seasonal number adjustments can have an error of up to ± 15%, or was it 5.xx%, lets go with 15%, sometimes more, sometimes less. They don’t know until they get all the numbers anyway, and then adjust them before the revision. So lets use an easy round number like 300,000, could be up to 345,000 or down to 255,000, because of the ± error that’s before the revision. So, you have seasonal adjustments that have an error in them. Then you have revisions that have errors built in. And there’s one more calculation they throw into this bowl of error numbered soup… it’s the birth/death adjustment, and, I’m guessing they have revisions and adjustment and errors in them also. So month after month we follow these adjusted revised numbers that have errors built in (thinking they're right, or close to being right), only to find out ALL of these horseshit numbers are revised, again, once annually! There's got to be an easier way!

NotApplicable's picture

There sure is, ignore them completely and hedge under the assumption that it will be seen as "good news."

Oh, and drink early. And often.

kchrisc's picture

"There's got to be an easier way!"

There is. Call Winston Smith in the Records Department of the Ministry of Truth. The numbers will then always be doubleplusgood.

Boris Alatovkrap's picture

Big Brother is increase reduced chocolate ration while war is rage in Eurasia. Please to report room 101.

LMAOLORI's picture

 

 

Here's the U.S. Ministry of Truth

 

False job numbers: Did the White House know?

 

http://nypost.com/2013/11/23/cooked-census-reported-to-obama-and-rahm/

 

 

Orwell learned the hard way but to his credit he learned and tried to warn...


The BBC declined to have a statue of George Orwell outside its headquarters. Quite right - his genius deserves better

snip...

 

"Orwell's Socialism was literally knocked out of him by his appalling experiences in the Spanish Civil War. Going out to Catalonia to fight Franco's military revolt against the Spanish republic, he was shot through the throat by a sniper, and while recovering, was caught up in a bloody purge launched by Spain's increasingly Communist-controlled Republican Government.

The experience of being hunted by the secret police and seeing his comrades arrested, tortured and killed by the Spanish Stalinists and their Russian bosses gave Orwell an abiding horror of Marxism, Soviet Communism and Stalin's many British apologists - including his own publisher, Victor Gollancz, who refused to publish Orwell's account of his Spanish experiences 'Homage to Catalonia' for fear of upsetting the Communists. Finally, Orwell saw what crimes could be committed in the name of 'socialism' and devoted the rest of his literary life to denouncing the perversion of the humane socialism he stood for."

 

http://www.dailymail.co.uk/debate/article-2191984/The-BBC-declined-statu...

kchrisc's picture

One must respect that Orwell put his blood on the line for his beliefs. If more of these "intellectual" cocksuckers would do the same, the world would be a much better place and more peaceful too. If they are fortunate like Orwell, and don't get killed, they will learn how full of shit they are.

 

"Mr. President, your daughters report to the front-line tomorrow to support your agenda."

Dr. Destructo's picture

"Mr. President, your daughters report to the front-line tomorrow to support your agenda."

I hope it's the agenda where we invade another country because they want to sell their oil for gold instead of the USD, and I hope it's the actual front line of that particular invasion.

 

JohnG's picture

 

 

There is.

Give me access to IRS databases, the actual data, and I can give you accurate stats.   I fail to understand why they don't use this data.  It's there.

It's almost like they want us to beleive the lies.

KickIce's picture

5 out of 4 people use statistics incorrectly.

TheReplacement's picture

That doesn't seem like a lot in a country of 315,000,000. 

At least we aren't France, which is nice.

Sudden Debt's picture

in Roman times, people used to work about 100 days a year... so in a way...

Seeking Aphids's picture

People....you mean Roman citizens? The lucky few? Most people living in Rome worked 365 days a year..........

TheReplacement's picture

The NSA spies on our enemies.

The NSA spies on you.

Pay your taxes.

Boris Alatovkrap's picture

More chocolate ration for all!

Dr. Destructo's picture

Nice! will it be an increase to 25g from 30g? Double-plus good!

hedgeless_horseman's picture

 

 

Today is a friday.  Therefore, as I have come to expect, there was no traffic on the roads this morning.  Many people no longer work on fridays.

Boris Alatovkrap's picture

Boris favorite day is "So Happy Is Thursday" day. Younger day is get "So Happy Is Thursday" face.

Sudden Debt's picture

you mean you're from washington right?

zaphod42's picture

Ah, yes.  The new normal.  4 day, 30 hours weeks.  Oh, and you are doing the work of two or three pre-dep/recession employees, you better have good Obamacare since you no longer qualify for company insurance, now reserved for the important, exempt staff.

Oh, yes.  Please buy our products.  You can borrow the money - just say you're going to school in all your spare time. 

And, did I mention, you are going to have to work some extra time, but not clock-in.  You don't want to do that?  Well, there are 3 or 4 hundred unemployed people who will gladly replace you. 

Whadda time... we'll look back on these days and laugh...

Craig

TheReplacement's picture

Not where I am.  I had took 45 minutes to go about 20 miles on the interstate starting at 9 AM this morning.  The road into the city was jammed.  Stupid accident didn't help but there were still enough cars on the road to back it up for about 10 miles.

The NSA spies on enemies.

The NSA spies on you.

Pay your taxes.

Sudden Debt's picture

It's a math thing...
I would like to explain it to you but it would be tot echnical for ya...

you'll just have to have blind faith...

q99x2's picture

Its a "V" shaped recovery for the multi-millionaires and a whatchamacallit recovery for the workers.

hedgeless_horseman's picture

 

 

V-shaped in nominal terms, L-shaped in real terms.

zaphod42's picture

For the rest of us, it is shaped like this:

\

:-}

Craig

caShOnlY's picture

my back of the envelope calculation says this baby is gonna blow in 2014 unless they can recreate one last housing bubble.  Then give it just 36 months more.

zaphod42's picture

I can no longer afford envelopes.  Had to grab a napkin at Starbucks.  I buy coffee there to help support the last American enterprise.

Craig

TheReplacement's picture

You only get Kona?

The NSA spies on enemies.

The NSA spies on you.

Pay your taxes.

LMAOLORI's picture

 

 

 

They're working on blowing that bubble again...

 

New Mortgage Rules Another Empty Obama Promise

snip...

About the only thing the new rules require is income documentation and debt limits for borrowers.

But they at the same time let borrowers count welfare payments as qualifying income and exceed the 43% debt-to-income threshold if they get their loan guaranteed through a government mortgage agency.

 

Since Fannie, Freddie and FHA now control 90% of the mortgage market, that won't be hard to do.

starman's picture

plain BS! ( bull shit)

Whoa Dammit's picture

A reminder to hiring managers who believe hiring that the cheapest workers is a good thing: Like Chinese trinkets, cheap things tend to fall apart. When one hires the stupid and the cheapest, rather than quality workers, one's business tends to eventually fall apart.

corporatewhore's picture

is intelligence a prerequisite to be a manager?  i don't think so.  Nor is independent thinking or -god forbid- imagination.  MBA'rs are taught means and methods how to legally discriminate, how to legally cheat, and always project a low figure so you can surpass your goals in between kissing the higher up's arse.

Dr. Destructo's picture

I wouldn't say we were taught the means and methods to cheat in our curriculum -that ability was already there for many, and that information alone would actually be useful. Though I would say that for the majority of our courses we were taught from a textbook by apathetic professors that wanted to rake in extra dough for their retirement.

The textbook was mostly expensive bullshit, of course.

pitz's picture

Yeah the huge travesty over the past decade or so was actually allowing "hiring managers" to exist.  Usually trained HR professionals, not even familiar with, or possessing domain expertise in the area of work.  No wonder the workforce/workplaces are generally so messed up, and competent people find it hard to be hired. 

yogibear's picture

The government doesn't need jobs, it just changes the employment stats and spends more to take up the slack in demand. 

The Federal Reserve is the great enabler by buying up the debt. Soon the Fed goes from owning 30% to owning 50% or more.  The Fed probably cooks the balance sheet  so it doesn't report off-banace sheet purchases.

zaphod42's picture

In your dreams it will take place in 2020.  Only if there is not a crash in the interim.  Otherwise, maybe 2040? 

Craig

NotApplicable's picture

Surely you know that the answer is '42.

TheReplacement's picture

It is isn't 42 you are asking the wrong question.

 

ptoemmes's picture

Take This Job (Reporting) and Shove It...

With apologies to Johnny Paycheck: http://www.youtube.com/watch?v=EzGoDtmTllg

 

 

overexposed's picture

Bureau of Lies and Statistics (But I Repeat Myself)