Wall Street Journal economics reporter Josh Zumbrun did an excellent job this week showing that Janet Yellen’s favorite gauge of the American labor market’s health has been recently been performing exactly how the Fed Chair has been hoping. The implication is that the case looks strong for the central bank to start raising interest rates – possibly as early as its meeting next week.
If Yellen – a noted labor economist – simply looks at the overall numbers in this JOLTS series, that assessment seems on target. But if she looks to see where the strength has been centered in this measure of the employment scene’s dynamism – and especially where job openings have increasingly been concentrated – she might be more cautious about tightening the country’s credit supply. For the new October figures show that their domination by low-paying sectors is up significantly.
My definition of low-paying sectors encompasses the retail industry, the leisure and hospitality industry, and the low-paying administrative and support services sector within the professional and business services category. The latter number isn’t explicitly reported by the Labor Department, which compiles all the JOLTS data. But I estimate it by (reasonably) assuming that administrative and support openings match this sub-sector’s share of the larger grouping’s total employment in a given month.
The total openings in these low-paying sectors came to 36.83 percent of all job openings in October. This preliminary number is actually a bit lower than the average for July through September: 37.23 percent, 36.63 percent, and 37.03 percent, respectively. But all of these numbers are considerably higher than last October’s final 33.26 percent.
And they’re higher still than the levels at the start of the last recession (30.46 percent) and at the downturn’s end (29.48 percent). Couple these findings with the share of hirings accounted for by the government-subsidized private sector of the economy, and for a Fed that portrays itself as being “data dependent,” and that prizes the JOLTS figures, the result isn’t exactly screaming “Mission accomplished” for America’s beleaguered workforce.