As it happens, I was at an event yesterday where Ed Lazear, the former economic advisor to President Bush, was discussing employment and the budget. With a graph much like this one (except more recently updated) he took us through what has been happening in the job market:
What it shows is that job openings are constantly being created and filled, and they tend to roughly match the number of people leaving their previous jobs over the long run, and even the not-so-long run. Even at the nadir of the recession, a whole lot of people were getting hired.
Unfortunately, a whole lot of people were also being fired, laid off, or "let go". Even though separations actually fell (presumably because people weren't quitting their jobs for greener pastures), hires fell even faster. The people leaving jobs weren't doing so because they had a better opportunity elsewhere. They were there involuntarily.
And many of them have stayed there for a long time. As Lazear pointed out, the longer you stay out of the workforce, the more human capital you lose. At some point, many people simply exit the labor market entirely--they take early retirement, decide to stay home with the kids, or what have you. There's nothing wrong with doing either if that's what you hoped and planned. But when it's a result of being forced out of the labor market, that's a problem. Human beings should not become obsolete.
This is what I thought of this morning when I saw the new jobs report. It's a solid jobs report--not a terrific jobs report, but a helluva lot better than what we were seeing six months ago.
But I want to know who's getting those jobs. Are we resuming normal state of play in the labor market, where hires roughly match separations, but leaving the hardest hit people on the sidelines? Or are we actually creating the conditions where we can start restoring those lost workers to the labor market?
The evidence is mixed. On the one hand, the number of long-term unemployed actually fell, while the number of short-term unemployed (5 weeks or less) actually rose; that's good news. But the number of "marginally attached workers", who want to work but have given up actively looking, has not fallen from the same period last year. And at 2.5 million it is still far, far too high.
The economy won't have really "recovered" until it has given those people another shot. Of course they'll benefit from a generally tighter labor market--but at this rate of job growth, those benefits will be a long time coming.
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