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JOLTS Data Suggests Labor Market Won't Normalize For Another Three Years
The good news in today's JOLTS report was that with Wall Street expecting Job Openings to bounce by about 20K from October's 4,834K (remember JOLTs is one month delayed) to 4,850K, instead the number reported was 4,972K. This was coupled with a drop in a hires from 5.1MM to 4.99MM, and separations (either quits or layoffs) from 4.863MM to 4.623MM, for a net separations number of 367K, in line with the revised 353K NFP number revision for November. On the surface, this suggests that Yellen's favorite indicator suggests the mid-summer rate hike is on its way.
However that was not all: the bad news was the as the Beverdige Curve, conveniently added to the JOLTs release shows, a long time has to pass before the US job markets renormalizes again.
This is what the BLS had to say about the skewed Beveridge curve:
This graph plots the job openings rate against the unemployment rate. This graphical representation is known as the Beveridge Curve, named after the British economist William Henry Beveridge (1879–1963). The economy’s position on the downward sloping Beveridge Curve reflects the state of the business cycle.
During an expansion, the unemployment rate is low and the job openings rate is high. Conversely, during a contraction, the unemployment rate is high and the job openings rate is low. The position of the curve is determined by the efficiency of the labor market. For example, a greater mismatch between available jobs and the unemployed in terms of skills or location would cause the curve to shift outward (up and toward the right).
From the start of the most recent recession in December 2007 through the end of 2009, each month’s point on the curve moved lower and further to the right as the job openings rate declined and the unemployment rate rose. From 2010 to the present, the point moved up and to the left as the job openings rate increased and the unemployment rate decreased.
The problem is that as the curve suggests, the current job openings rate implies either an unemployment rate of 3.5%, well below the current one, or that the current unemployment rate implies a job opening rate some 100 bps lower then what is being represented.
The bottm line is that there as the BLS also says, there is a great mismatch between available jobs and skills, a process that won't renormalize for a long time. How long?
A simple extrapolation based on the trailing 12 month change in jobs vs the total number of hires shows the following:
In other words, for the Beveridge curve to renormalize, and for the number of hires to catch up to normalcy, and a normal number of separations, at least another three years will have to pass, a fact that is well-known to Janet Yellen for whom JOLTs is far more important as a labor market indicator than the crunt NFP data.
So was the data good enough to suggest a rate hike as soon as the April FOMC meeting, or did it confirm that another three years have to pass before Yellen is "patient" enough that she will wait another three years before the labor market finally returns to normalcy?
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And this is only QUANTITY, and not QUALITY.
pods
Exactly. Folks need to eat more burgers if you want more burger-flippers.
quality jobs offer more than better pay. a person feels (and is) often more productive and challenged. i feel for our 20 somethings forced into meaningless jobs-----are they supposed to accept slavery? wait until they figure out they have the power to change things
id never want a careeer as a burger flipper. even a year or two and i'd be ready to do ANYTHING else.
Sweet. Right before automation replaces 40% of US jobs.
"...there is a great mismatch between available jobs and skills, a process that won't renormalize for a long time..."
Not until the curriculum of public secondary education reflects real-world utility will this be rectified.
Students are rarely taught how to teach themselves, or trained to think. Many schools are like vomitoriums, with an emphasis on mass-consumption and regurgitation.
I've trained as a mechatronics/automation technician, and during this training approximately 70% of my cohort washed-out. Some of this was due to change of personal circumstance, a lack of discipline, or most notable, an inability to think rationally, logically, abstractly, or in simple terms of cause-and-effect-- skills that are critical to sucess in an ever-increasingly data-driven and automated workplace.
While I offer this anecodote, automation is forcing upon us the reality that not every person is capable of attaining the level of training and productivity demanded by the labor marketplace: many will be left out. Do we label them "useless eaters" and follow that line of thought to its logical conclusion, or should we subsidize "make-work" positions for persons who can offer little more than time and labor?
I've got a friend who owns a machine shop with the latest in CNC equipment and he's willing to train but has hell who can do basic math. Indoctranation has replaced education and what's so bad is the government insists on making it worse.
I see the same damn thing.
HA! 20 somethings are way too busy shoving their heads up their iPhones all day Twittering every single moment of their meaningless lives to each other to ever be able to figure out shit.
Opps.. I'm wrong.. They know EVERYTHING about global fucking warming!
WWWHHHHHHAAAAAAAAAHH GLOBAL WARMING!!
Absolutely correct. As long as mommy, daddy, and obomber are paying the bills and buying the phones, then the current crop of dolts will continue their march to the cliff - along with the rest of the FSA.
When momy and daddy's money runs low, then cliff will come into view, and the FSA will have to look up from their phones and make the hard choice - die fighting, or simply die.
Many of them will simply continue the fight to have Dear Leader Obama take from others (productive people trying to feed their families) to give to them.
"Free" junior college!!!
"Free" ObamaPhones!!!
"Free" ObamaCare!!!
"Free" food!!!
"Free" housing!!!
"Free" walking around money!!!
The list cotinues to expand.
"Free" green fees!!!
The U.S. needs to crank out more engineers and fewer lawyers. One thing China has on the U.S. is that something like 50% of their graduates are in the technical disciplines.
The U.S. is on the fast road to nowhere, unless you like the "Tort Nation" moniker.
China cranks out reverse engineers.
lol...
"First step on layoff train has happened - complete hiring freeze."
http://www.thelayoff.com/chesapeake-energy
Sorry....can't stand the burgers, they've gotten rather nasty in the past couple years.
Mmmm . . . ice cold Beveridge Curve
They also said this 3 years ago
Err, Normalcy isn't a word..... It's Normality...
Too strong a beverage :-)
Whoa... whoa ... whoa... Wait a minute there. President Obama said that his eCONomy has never created jobs at a faster pace than now. Stop with the propoganda! Times have never been better for the shining city on the hill. Three part time jobs and loving it! Merika Fuck Yeah!
'Normalize' to what....what are we doing, building a bunch of new factories and mills and whatnot? 'Normal' is just irrelevant here in 'temp job Murka'.
its wierd trying to make sense of gamed numbers
Multiply bad news by 5 so 15 years no "normalize"
Divide good news by 10
etc.
"The problem is that as the curve suggests, the current job openings rate implies either an unemployment rate of 3.5%, well below the current one, or that the current unemployment rate implies a job opening rate some 100 bps lower then what is being represented."
BECAUSE THEY ARE FAKE JOB OPENINGS.
Go read a few "job openings" sometime. Only jobs that pay anything ask for the candidate to be a combo brain surgeon/truck driver/accountant who's also fluent in Spanish. (Of course, I can do all those things, but I already have a job.)
I wonder if the Beveridge curve factors in monetary policy unbeknownst at the time, which henceforth makes yet another comparison to the past, somewhat unreliable, if not outright irrelevant.
Have a Jolt drink on me. Raise the bar and reduce the product potency to whittle away market share by driving down product quality. Yet, emptying product cost yields provide short term profit margin gains. You go girl… Jolts on the house!
/SARC
Three years to normalcy....I wonder if they will let me out of the hospital then...these padded walls are starting to make me go crazy....
Yea well, here's some "jolt" data for you; unless the idiotic ChalkyCare is amended, or destroyed, the US economy will never recover as more and more people in the middle class have their paychecks and wealth destroyed by Emperor Goebbels and his crew.
www.traderzoo.mobi
You dare blaspheme Dear Leader Obama?!?!?!? Dear Leader Obama and his minions INSIST that Dear Leader's policies of skyrocketing health insurance costs, excessive taxes, and business strangling regulations have gotten unemployment down to 5.5%. The Dear Leader Obama "recovery" is finally upon us. Forget the fact that so many have given up hope of finding a job - which reduces the government unemployment number by ten, or so, points. Forget that the employment increases are in the 60 year old and older category (should be retiring but can't). And never mind that many of the jobs are part time. Praise be to Dear Leader...
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Just recently, a toilet paper manufacture is going to remove the cardboard core to save the environment and raise prices. The first words out of Mrs. Atomizer’s mouth, ‘ I’m not going to buy that product'. I chime in and support her. [Having fun] State, “Looks like Obama is going to sanction Toilet Paper Roll Kazoo under another EO decree”. She just laughs.
The Labor Department is the biggest fudge factory in America,
http://www.globaldeflationnews.com/not-since-1977-has-the-labor-force-pa...
The labor market will never normalize as long as the FED has their hands in it....
I don't think the labor markets are ever going to "normalize", the stats are garbage, the economy has changed, much harder to track, these charts ignore wages, don't really reflect participation rate, etc.
I can't make much sense of the Beveridge Curves, maybe because I'm sober, but just that hires chart is interesting, and maybe more positive than any other chart I've seen on the labor situation. But it doesn't reflect salaries either, does it.
What makes her think she HAS three years? Do any of these geniuses really believe this can go on for three more years?
Bless their hearts. Time to load 'em all back on the little yellow buses and send them home.
Newsflash Mr. Yellen...As 'patient' as YOU may be, it's doubtful that either the system or the people will be able to wait for whatever miracle you think is coming.
And I'm gonna LAUGH out loud when the whole Potemkin economy DOES come down around your deaf ears, bitch. I will relish the helpless, sick look on all your faces when you realize it's OVER and you really fucked up bad and there won't BE any more bailouts. The village will be looking for a good scapegoat then...you may end up wishing they HAD audited you guys and put a stop to your antics before it got to that point.
I can definitely see the Fed taking major heat should we have another bad crisis...Congressional hearings, the whole bit. And I can see their friends happily throwing them under the bus as a suitable "face" for the crisis...grilling them on C-Span about why they continued with QE even after they knew it didn't work and was making things worse. Calling into question their whole mandate and reason for existence...and of course providing the angry public with a juicy target and keeping attention off THEIR own doings. They can blame it all on Fed incompetence, instead of failed policy from their end.
Yellen is stupid if she thinks TPTB will come to her defense in the event of another major financial crisis. If we do get one, there won't be any bailouts being arranged behind closed doors...this time heads will roll. Big heads, and no one will be safe. Once a target is identified, all others will pile-on. The Fed is too good a target, because of the influence they have over the economy...it's VERY easy to push the blame on THEM when things go wrong. The politicians and the other big banks will turn on the Fed to avoid taking blame themselves. They will cut them off like a toenail, and try to blame the Fed's bad policies for the trouble.
Hey, someone like say, a Goldman Sachs or something might actually ENCOURAGE this...I mean, if you got rid of the Fed, you'd need someone else to do all that stuff, and isn't it fortunate that we have that wonderful Mr. Blankfein with all his expertise offering his assistance?
Yeah, another financial crisis, and politicians and Goldman will throw Yellen into the volcano to avoid taking any blame themselves. They will destroy the big, bad Fed, and ride in like the cavalry to rescue the economy and restore it to their version of sanity.
Central banks beware. You guys aren't big enough to battle the Goldmans of the world, and you don't have the political power to wage that war either. But because of your very large interventions, you DO look like the responsible party to many, many people. It's an easy connection to make. Ask yourselves if you are being looked to as leaders here, or if in fact you are being POSITIONED to take a fall if needed.
It seems to be their position that it is policy-makers who must make the structural changes, that they can only influence monetary policy. If that is so, then they should stop propping the system up to protect those policy-makers. Let the economy correct, and turn the heat up. They could publicly state their refusal to implement irresponsible policies without such fiscal reforms, and they would get wide support from the public. It would also force individual lawmakers to call for those policies themselves if they want them, and allow the Fed to assume the high ground by saying, "No, you can't DO that, it is irresponsible to treat money in that way."
If I were Yellen, or Draghi, etc, I'd be thinking about how I would come through another crisis, how I'd be seen in the aftermath. And I'd want to make sure I looked real good, and take steps to protect my own ass. I'd want to be sure there were plenty of videotaped footage of me SAYING these things, so I could post it all over the internet and say, "See? I TOLD you so!" at those Congressional hearings...
Look at the chart, we're obviously in a "Jobs Bubble".
Govt intervention is the key here. Without that, we got nuthin.
JOLTS = DOLTS
Not sure we're going to make it to 2017 before the next recession takes it down.
A different portrayal of the mixed bag, w/ 2012, 2013 and 2014 represented: https://www.frbatlanta.org/chcs/LaborMarket.aspx?d=1&s=tw