We Need More Job Creation
August 22, 2014
The latest Job Openings and Labor Turnover Survey (JOLTS) has been released, a report that provides hiring and separation details for each month. According to Edward Lazear, fellow at the Hoover Institution, the report makes clear that the United States has yet to recover from the economic downturn.
Lazear explains what a typical JOLTS report might show:
- A month that shows a gain of 100,000 jobs would generally reflect 5.1 million new hires and 5 million separations.
- In June 2009, at the worst point of the recession, jobs decreased by 500,000. During that month, there were 3.6 million new hires.
In short, an economy tends to experience a great deal of turnover, even during periods of weak growth. When employment falls during downturns, Lazear says, the culprit is often a reduction in hiring, not necessarily an increase in firings.
So where does the United States stand in terms of hiring and firing?
- According to the latest JOLTS, hiring picked up to 4.8 million in June, the highest since February 2008.
- During the recession, the typical month saw 4.2 million new hires.
- Prior to the recession, hiring averaged 5.1 million monthly from 2000 to 2007, reaching 5.5 million per month at its peak.
Significantly, Lazear points out that the U.S. labor force has grown since pre-recession years; it is 8 percent larger than it was 13 years ago. In order to get the economy on track, the country would need to see 5.2 million new hires each month.
NCPA Senior Fellow Pam Villarreal noted that there is another feature of today's job creation that needs to be noticed: the increase in new jobs has largely taken place in sectors like retail, hospitality and food services, which typically pay lower wages.
Source: Edward P. Lazear, "Job Turnover Data Show Lots Of Churning, Little Job Creation," Investor's Business Daily, August 19, 2014.
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