Wednesday, March 12, 2014

January JOLTS and February Flows

Here are updated graphs of JOLTS (January) and employment flows (February).  Watching these series from month to month is kind of like watching grass grow, but they generally continue to show tentatively positive trends.

I use weighted moving averages with the JOLTS data to cut down the noise.  Churn is slowly increasing in all the relevant measures.  In late 2012, these trends began to flatten.  They are flattening again (see graph of slopes), so this is something to watch in coming months.  If the trends start to decline, that could signal a danger as the Fed looks to tighten monetary policy.  This could be a sign that the economy can't overcome the disinflationary effects of the taper.

The Beveridge Curve continues to approach the pre-crisis trend.  This will mostly be a product of the unemployment rate declining.  The Beveridge Curve for the 45+ age group moved especially toward the old trend (the blue dot left of Dec. 2013 is the Jan. 2014 point).  This is probably related to the steep decline in long-duration unemployment in January.  Much of the long-duration unemployed are from this age group.  This might reverse in February, when long-duration unemployment moved back up.

I would hope to see hires accelerate and the Beveridge Curve shift left as we move away from extended unemployment insurance (EUI), but as of February, outcomes appear to be mixed.  Weather-related issues don't appear to be as strong in March, so next month will give us interesting information about the direction of labor markets.

The Employment Flows data is updated through February.  The trends there continue to give a positive picture of post-EUI employment.  The flow of unemployed workers out of the labor force has actually declined significantly in the last 2 months.  Relative flows out of the labor force have come from employed workers.  These are positive trends.


  1. What I dislike about the current debate on LFP is the assumption that people are dropping out for structural reasons. Swelling disability rolls (SSDI and VA) suggest otherwise---people are dropping out as they can't find a job, or they have learned to game the system. Both results are bad.

    Beyond that, people and cultures are mutable. If work is no longer physical, and health care is better, people might decide to work to 70. Maybe not full-time, but they would participate.

    If demand for labor is strong enough, you will see employers accommodate workers. An older fellow might say, "You know, I will work solid, but I want Fridays off. I need the extra day."

    Today, that guy is sent packing. But if labor markets are tight, maybe the employer shrugs his shoulders and says okay.

    I think the goal should be higher LFPs, not defeatism and rationalizations for the secret agenda of the right-wing, which is always (mysteriously and self-destructively) for tight money.

    1. I think the goal should be whatever workers want it to be. My point is that there is nothing to see here. There is nothing unusual about LFP, once we account for demographics. In fact, if anything, older workers are working more, just as you hope they might. I don't mean to express defeatism or rationalizations. I'm saying, everyone's boxing shadows. There is nothing to be rationalized and nothing to be defeated by. Long term, there aren't structural or cyclical problems apparent in LFP levels. This is just a mirage produced by aggregated statistics and inappropriate assumptions of ceteris paribus, mixed with widespread public posturing.

      The disability issue also appears to be mostly demographic, as far as I can tell. Every generation tends to swell disability rolls once they hit their 50's, and the boomers are moving through those age groups.