It’s Not Quite That Bad Out There
Katherine Rampell, the editor of the NY Times’ Economix blog, has a post up this morning calling attention to a new BLS report which states that there is still only one job for every five job applicants. This is a number that has been endlessly repeated in the media for months now. The Washington Post was harping on this way back in July, and you can find it just about everywhere else as well.
The truth is that statistic is simply not true. The Cato Institute’s Alan Reynolds explains that this number is due to a BLS report called the “Job Opening and Labor Turnover Survey” (JOLTS) which asks a number of firms how many jobs they’re advertising outside of the workplace.
But note well that this concept of ‘job openings’ does not purport to include ‘every available job.’
During a recessionary period in which the number of job applicants has gone up but demand for labor has gone down firms don’t need to search as hard to attract workers. Unlike when unemployment is low and the labor market is “tight”, companies have to do less searching for applicants because the applicants essentially fall into their laps. For this reason, they advertise less.
That’s the reason the JOLTS survey is misleading. Companies may be advertising jobs less but that doesn’t mean there is literally only one job for every five applicants. Reynolds, in his article, went on to point out that in May of last year the JOLTS survey showed 3.2 million job openings yet 4.5 million people were hired. Clearly, the official “job openings” number wasn’t indicative of the entire job market.
The numbers for December are similar as well. There were 3.1 million job openings in December and yet, mysteriously, 4.2 million people happened to get hired. The moral of this story is that you should always double-check your numbers when doing economics. But you should also look for the story behind the numbers because numbers are easily manipulated.