Help Wanted: Economic Expansion And The Job Market
October 21, 1999
The 4.2 percent U.S. unemployment rate is so low it has raised concern about so-called wage inflation: in a tight labor market employers might have to bid up wages to retain and attract workers.
Although the unemployment rate is one measure of "tightness" in the labor market, another is the number of vacant positions. While further downward movements in the unemployment rate are not likely to be very large, the number of job vacancies can easily keep increasing.
Unfortunately, unlike some other industrialized countries, the United States does not collect data that measure vacancies directly. Instead, the best surrogate is the Conference Board's Help Wanted Index (HWI).
The HWI is compiled by tracking the number of help-wanted ads in the largest newspaper in each of 51 large cities, which are weighted and combined to yield regional and national HWIs.
For the period 1992 to 1998:
- Nationally, the number of vacant positions was 44 percent higher in 1998 than 1992, as measured by the HWI.
- The expansion appears to have had the largest impact on the Mountain Region -- Arizona, Colorado and Utah -- where the HWI increased 65 percent from 1992 to 1998.
- By contrast, in the West South Central region -- Louisiana, Oklahoma and Texas -- the expansion appears to have had the smallest effect on job vacancies, with the region's HWI rising only 20 percent.
Although the numbers suggest the expansion has had a diverse regional impact, economists say the HWI is affected by factors other than vacancy rates, such as the shift in the economy toward white-collar positions, which tend to more advertised than blue-collar ones.
Source: Howard J. Wall "Help Wanted" National Economic Trends, May 1999, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166, (314) 444-8808.
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