The "Job Seeker's Ratio"

http://www.epi.org/publications/entry/continuing_dearth_of_job_opportunities_leaves_many_workers_still_sidelined

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"Everything should be made as simple as possible, but not simpler." (Albert Einstein)

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This morning, the BLS (Bureau of Labor Statistics) released its March report from their Job Openings and Labor Turnover Survey ("JOLTS"). The BLS has been highly respected for decades based on the precision and care with which they put together their data. This particular survey is the one that produces the "ratio" figures that are often quoted by economists on job seekers/job openings.

So, the total number of job openings for March was 3.1 million. The total number of unemployed workers was 13.5 million. Thus, the ratio of workers to job openings was 4.3-to-1 for March. The good news here is that the "ratio" has been as bad as 6 or 7-to-1 during the worst days of the worldwide financial crisis.

That's the good news. But, as Heidi Shierholz of the Economic Policy Institute points out, the highest this ratio ever got in the early 2000s downturn was 2.8-to-1 (in the middle of 2003). March marks over two years that the "job seeker's ratio" has been substantially above 4-to-1.

More good news: layoffs are back down to pre-recession levels. In 2006, the layoff rate (layoffs as a percent of total employment) averaged 1.3% versus the first quarter of 2011 where it averaged 1.2%. The bad news: hiring is "abysmal." The average number of hires per month in the first quarter of 2011 is 27% below the average number of hires per month in 2006.

How does all this go together? The looming shortage of 1 million jobs (by 2018) predicted in the NY Times recently was for jobs in fields that those who are currently unemployed are not trained for. As Alan Blinder (Princeton Economist and former Fed Vice Chairman) said when he shifted his position on free trade, the U.S. could lose as many as 40 million jobs to offshore employees who are cheaper: tax lawyers are not safe/divorce lawyers are. It's not the level of education so much as it is: must the job be performed here?

So, is the current "job seeker's ratio" reflective of long term structural unemployment? Stay tuned.