Should we be optimistic about unemployment? Maybe a little.
Several articles recently put a positive spin on the state of the economy from the vantage point of the labor market. Tomorrow’s new jobs numbers will no doubt add to the prognostication. Is that optimism really justified?
The 11 million Americans without jobs would probably say no. Unemployment is stuck stubbornly high at about 7 percent; long-term unemployment, with all its pernicious consequences, is still near historic highs; real median wages are falling. It’s bad news on many fronts.
But the labor market is complicated and the Great Recession was a particularly nasty bump in the road. Perhaps more data and a longer-term outlook will give some more context.
The charts below combine 12 years of monthly unemployment and job openings data for the full labor market and seven different industries.
Though there are still 11 million people hunting for work, there are also nearly 4 million open jobs (nearly twice as many as mid-2009). Assuming each unemployed person could find an open job, the unemployment rate would fall to much less worrisome levels. Of course, that’s a completely unrealistic assumption (more on that below) but the numbers indicate growing demand for labor—an important prerequisite for full employment.
More subtly, every industry is following the same pattern as the overall job market, even if some have much further to go. The steady downward march of unemployment mirrors a similar, if slow, uptick in job openings. In most industries, openings are at or close to their pre-recession levels. That pattern suggests that the slow recovery is a slow recovery for all industries, rather than one or more industries having remained in peril.
Patience is a virtue, but not good policy
If things continue as they are, the job market should recover—eventually. But that’s not helpful to the people who need work today. How can we fill some of those 4 million open jobs?
To start, we need some more detailed analysis. Perhaps the unemployed live thousands of miles from the open jobs. Perhaps some industries’ unemployed populations are older and need retraining. Maybe others simply need good placement services to match jobs with workers.
More detailed looks at other employment statistics data can and should give valuable insight into these questions and the policies that could flow from them.
Follow Zach McDade on Twitter at @zmcdade