One of those running-around days prevented me from commenting yesterday on the new U.S. government figures on labor force turnover. But since they’re a favorite indicator of Federal Reserve Chair Janet Yellen. and since last month’s figures contained a big surprise, the so-called JOLTS report for May is worth a close look.
First, that surprise. The April JOLTS figures (there’s a two-month time lag for this series) showed a startling 23.15 percent sequential jump in the number of job openings in manufacturing. Moreover, the 415,000 figure was the second highest of all time. The increase, which produced the second highest monthly total of all-time (JOLTS statistics only go back to 2000), convinced observer’s like The Atlantic‘s James Fallows that this long-time employment laggard was suddenly “creating too many jobs.”
As I noted last month, the number looked fishy because it contrasted with virtually everything else we’ve learned about manufacturing in recent years – along with many longstanding assumptions.
So it wasn’t entirely surprising to see that the new JOLTS report revised that April manufacturing figure down to 397,000 – still historically high, but no longer so stratospheric. Just as important, the May total (which is still preliminary), was 353,000. That’s healthy, but has been bested several times in the last decade and a half. Let’s hold off, therefore, on heralding the return of the manufacturing renaissance meme – which has never been justified in the first place.
Second, the May JOLTS figures strengthened claims – including by yours truly – that the current American economic recovery has featured entirely too much low-wage job creation. Since I last looked at this subject through the JOLTS lens, past figures have been revised. But they tell the same story, according to my methodology of taking the reported openings in the retail; and leisure and hospitality employment super-categories, and then adding a pro-rated figure I calculate for the low-paying administrative and support services sector of the generally high-paying professional and business services super-category.
When the Great Recession began, at the end of 2007, these low-wage portions of the economy accounted for 31.94 percent of all job openings. By the time the recovery began, their collective share fell to 28.38 percent. The (preliminary) level for May? It’s rebounded past the pre-recession level and climbed to 32.53 percent.
Employment figures like the JOLTS data have been strongly influencing the Federal Reserve’s decisions on whether to raise or lower interest rates – which in turn helps determine how fast and whether the economy will continue growing, at least in the near future. If the central bankers look at the above crucial JOLTS details, keep expecting the country to stay on its (incredibly) easy money course.