It’s time again for the monthly JOLTS report – for July – an occasion eagerly anticipated by the economics, business, and investing worlds because these data on turnover in American employment are known to be among Fed Chair Janet Yellen’s favorite measures of the labor market’s health. As a result, they’re likely to play a big role in her decision on raising interest rates – which could come next week. This latest edition leaves one recovery-era story intact – regarding the outsized importance of low-wage jobs during this long but weak expansion). But another trend – the prominence of subsidized private sector positions – took something of a hit.
The JOLTS data track how many Americans are being hired and leaving their jobs, the reasons for the departures (voluntary or involuntary), and the numbers of job openings posted by employers each month. I focus on the openings, since they say the most about what employers are seeking, and therefore which sectors of the economy look to be the most robust,at least in terms of employment-creating power. And as known by RealityChek regulars, the share of openings accounted for by low-wage sectors has risen steadily during this recovery.
In July, low-wage businesses – in retail, leisure and hospitality, and the low-pay sub-sector of the generally high-paying professional and business services sector – were responsible for 32.91 percent of all job openings companies said they posted. That’s not a record for the recovery, but it’s not far off. (Also, it’s only preliminary.) Moreover, it’s about a full percentage point higher than the 31.90 percent final figure for June, which was downwardly revised from 31.99 percent.
For comparison’s sake, when the last recession began, in December, 2007, this figure was 31.94 percent. When the recovery began, in June, 2009, it had sunk to 28.38 percent. Maybe this partly explains why Americans are so down on the economy even though it’s officially been growing for more than seven years?
The subsidized private sector consists of those industries where levels of activity (including hiring) are determined largely by government decisions, even though they aren’t formally government-owned. Healthcare services are the leading example. Just as they’ve spearheaded job creation during the recovery, they’ve also generated a disproportionate share of jobs openings recorded by the JOLTS reports. In July, the number was 18.36 percent.
That’s not only much lower than the June figure of 19.97 percent (which was revised up from 19.90 percent). It’s nearly as low as it stood at the recession’s onset (18.31 percent). Yes, when the recovery began, subsidized private sector jobs accounted for 20.31 percent of all announced job openings. But at that time, American employment creation was still deeply recessed — to the point at which healthcare services in particular were practically the only game in town.
Since the Fed says it’s interest rate decision will be determined mainly by the economic data as it comes in, and since recent indicators for the U.S. economy have rarely been more confusing, even the central bankers may not know what they’re going to do when they meet next week. But if the above JOLTS internals shape their conclusions much, bet on yet another “Hold.”