Tag Archives: unemployment data

The Jobs Outlook – It’s Data Time…

by Andrew Horwitz, Director of Strategy & Planning, JobGiraffe

Andrew Horwitz
Andrew Horwitz

JobGiraffe has been in the business of finding great jobs for great candidates for many years in every type of job market imaginable.   Although I do not hail back to it s beginnings in the 60’s, I know with certainty that 2009 to 2013 was one of the toughest job markets for our company on record. Over the past twelve months we have all been hearing “things are getting better”, so I believe now is the time to take a deeper look at the data and trends affecting employment across the country and, specifically, in our own Chicago Metropolitan Area.

We can utilize this information to analyze the job market’s relative strengths and potential weaknesses in an attempt to identify future opportunities as well as potential pitfalls. In order to even try to give this complex and multi-faceted topic the depth and nuance it deserves, this will be the first in a series of several posts attempting to unpack and put into context some of the key metrics used to understand the economy and the labor market. Hopefully, through this exploration, we can find both meaning and tangible, actionable intelligence in the data.

The national unemployment rate provides a rather rudimentary and often unsatisfying snapshot of the national employment situation, but it’s a useful starting point. As of February 2015, the most recent data available, the unemployment rate currently stands at 5.5%. It’s important to note that the unemployment rate has been relatively consistent in its erosion. In February 2010, February 2011, February 2012, February 2013, and February 2014 respectively, the rates were 9.8, 9.0, 8.3, 7.7, and 6.7 percent.[1]

Another useful – and in my opinion, more telling – indicator is the ratio of unemployed individuals to job openings. As of January 2015, there was a modest 1.8 unemployed individuals actively seeking work for every available job. To put this in perspective, in June of 2009, when the recession technically ended, there were 6.2 unemployed persons per job opening. [2] The number of total job openings and new hires have also increased, illustrating how the job market is picking up steam. This January, there were 5 million total job openings, which exceeds the pre-recession highs.[3] 4.5 million of these openings were in the private sector. The pre-recession highs for total openings in the private sector was surpassed in April 2014. Yet the number of total hires, 4.7 million in January 2015, was still 3.4 percent below their pre-recession level. [4]

The voluntary quit rate, a good indicator of positive career mobility, rose to 2 percent in January, as 2.8 million Americans voluntarily left their jobs. The prevailing wisdom is that individuals leave their current job with the anticipation of greener pastures, and this is the highest level of voluntary quits, as a percentage of total separations, since April 2008.[5] Even through a conservative and cautious interpretation of this data, its pretty clear that more gainful and promising employment is getting easier to attain for most.

However, there are still some persisting structural issues within the composition of the labor force. The labor force participation rate rests at 62.8 percent, according to the most recent BLS data from 2015. To put this in context, the labor force participation rate stood at 63 percent in February 2014, 64.9 percent in February 2010, and 66.3 percent in 2007, prior to the recession.[6] The labor force participation rate is defined as the percentage of ‘working age persons’ (between 16-64 years old) who are either employed or are unemployed, but looking for a job.[7] Part of this decline in the labor force participation rate can be attributed to the demographic shifts caused by an aging population as baby-boomers retire and drop out of the labor force. However, many individuals at or approaching retirement age were pushed into an involuntary, early retirement due to the economic circumstances during and after the recession. There are still many “missing workers,” people of prime working age that have actively given up pursuing employment due to their frustrations in finding a job. While many of these potential members of the workforce might return to actively pursuing employment when they feel that their prospects for landing a job have improved, many “missing workers” may never find their way back to the workforce.[8]

Underemployment and involuntary part-time employment are two other pesky remnants of the recession. It is encouraging that there has been some long-overdue improvement in the numbers regarding involuntary part-time employment recently. The household survey data, collected by the Bureau of Labor Statistics, indicates that the number of individuals who are involuntary working part-time decreased by 175,000 in February 2015, and 570,000 in the past year.[9] Underemployment is a measure of labor utilization that combines the percentage of the labor force that is ‘highly skilled,’ but is working in ‘low skilled jobs,’ with the percentage of part-time workers that would prefer to be working full-time. [10] The underemployment rate stands at a concerning 16.2 percent in February 2015, but is down from 17.5 percent in February 2014. [11]

Long-term unemployment produces some of the most deleterious effects on a country’s economy and its long-run fiscal health. When individuals are unemployed for a period of six months or longer they find it progressively more difficult to be selected for interviews as their resumes are more readily passed over, often due to the unfair negative stigmas employers associate with being unemployed. Long-term unemployment squeezes budgets from both ends as tax revenues drop from fewer people contributing to payroll and income taxes, while benefits payments go up as those same people draw on various unemployment benefits. Strained budgets, especially at the state level, have the added effect of making it more difficult to re-train workers with new skills, and thereby ease their transition back into the workplace. Inevitably, strained budgets also lead to cuts in discretionary state spending, which not only saps public sector job growth, but can have spillover effects negatively influencing private sector job growth as well.

Historically, employment security in the US has not been as strong as it is in country’s like Japan or Germany. However, the United States in recent decades has had a less sticky and more fluid, dynamic job market. Americans found it much easier to quickly find new jobs, and rates of long-term unemployment were modest when compared to other OECD countries. Our experience with long-term unemployment changed after the recession. Currently, 31.1 percent of unemployed jobseekers have been out of work 27 weeks or longer, a number that is twice as high than it was at the beginning of the recession.[12] The number of long-term unemployed remains at around 2.7 million. The good news is that the number of long-term unemployed is down by 1.1 million year over year, so progress on this front is encouraging.[13]

By in large, the headwinds that were tempering economic growth in the post-recession economy either are or are starting to subside, and the tailwinds created by a more structurally sound economy are taking hold. This is reflected in these numbers, which clearly support the notion that the job market is improving, but is not yet fully healed. National employment figures tell us only part of the story. One characteristic of the nation’s recovery that cannot be overlooked is how growth in the post-recession economy has not been uniform, and outcomes have varied throughout the county – a topic we will explore further in future posts. The next post will focus on the relative strength of Chicago’s market as we delve into how our beloved city has fared.

Thank you for your readership and stay tuned.

Andrew Horwitz
Director of Strategy and Planning
JobGiraffe

[1] United States Department of Labor. Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey. 29 Mar 2015.

[2] U.S. Department of Labor. Bureau of Labor Statistics. “Job Openings and Labor Turnover Survey Highlights.” January 2015. P.1

[3] U.S. Department of Labor. Bureau of Labor Statistics. “Job Openings and Labor Turnover Survey Highlights.” January 2015. P.2

[4] U.S. Department of Labor. Bureau of Labor Statistics. “Job Openings and Labor Turnover Survey Highlights.” January 2015. P.5

[5] Bloomberg News. “More Job Openings Move Needle on Yellen Dashboard: Economy.” 10 Mar 2015.

[6] United States Department of Labor. Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey. 29 Mar 2015.

[7] Moffat, Mike. About Education. “What is the Labor Force Participation Rate.”

[8] Casselman, Ben. FiveThirtyEight. “More of the Long-Term Unemployed are Finding a Job.” 29 Dec 2014. 

[9] Baker, Dean. Center For Economic and Policy Research. “Job Growth Remains Strong in February.” 6 Mar 2015.

[10] Investopedia. Investopedia Dictionary. “Underemployment.”

[11] Statista. “U.S. Underemployment rate from February 2014 to February 2015 (by month).”

[12] Bloomberg News. “More Job Openings Move Needle on Yellen Dashboard: Economy.” 10 Mar 2015.

[13] Bureau of Labor Statistics. “Employment Situation Summary.” The Employment Situation – February 2015. 6 Mar 2015.