Where are the Jobs?

 Popular Economics Weekly

 

 Calculated Risk

The number of job openings increased to 6.6 million on the last business day of July, the U.S. Bureau of Labor Statistics reported last week, a good sign. Labor’s JOLTS report will be an important indicator for the last (September) unemployment situation report that comes out just before the November election.

These changes in the labor market reflected an ongoing resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it, said the BLS. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by four geographic regions.

It is showing that certain segments of the economy are doing well, in durable goods such as autos and home sales, because the top 20 percent of white collar income earners that stay employed while working from home, but not the 80 percent of essential workers that really make our economy grow.

For instance, the unemployment rate for companies involved in travel, hotels, dining out and other forms of leisure and hospitality stood at a stunning 21.3 percent last month, whereas the unemployment rate among banks, insurers, Wall Street brokerages and other companies involved in the handling of money was just 4.2 percent in August.

The JOLTS report showed hires had decreased to 5.8 million in July from 7 million (blue line in graph). This tallied with other indicators that fewer workers were being hired in July. Total separations were little changed at 5.0 million. Within separations, the quits rate rose to 2.1 percent, a sign more workers were finding better jobs. But where are they?

Hires increased in federal government (+33,000), largely because of Census hiring. Hires also increased in real estate and rental and leasing (+26,000). But the total number of hires decreased in all four regions.

The job openings were led by the retail sector, with 172,000 new vacancies, reports the Bureau of Labor Statistics (BLS). There were an additional 146,000 jobs in healthcare and social assistance. In the construction industry, job openings increased by 90,000. The job openings rate shot up to 4.5 percent, the highest since October 2019, from 4.2 percent in June.

While schools have opened for the new academic year, many are conducting virtual classes, reports Reuters. Problems securing childcare have forced some workers, mostly women, to resign from their jobs. The labor participation rate for women dropped in April to levels last seen in the late 1980s and has not rebounded much since.

Jobs decreased in a number of industries, with the largest fall in accommodation and food services (-599,000), followed by other services (-143,000), and health care and social assistance (-137,000).

This doesn’t show a very strong job recovery, and there will be many teachers and students opting to stay at home and study online, if they can afford it.

Over the 12 months ending in July, hires totaled 70.2 million and separations totaled 78.5 million, yielding a net employment loss of 8.2 million. These totals include workers who may have been hired and separated more than once during the year.

I don’t believe the picture will change much come November. Those with jobs will spend, but not the majority of wage-earners that will face an uncertain job future without more government aid and a more coordinated effort to control COVID-19 in the coming winter season.

Harlan Green © 2020

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