AmazonTania
11-24-2013, 01:09 PM
Forget everything you have learned from the CBO about what 'should' be the Unemployment Rate today. I'm sure that will require zero effort whatsoever...
http://img837.imageshack.us/img837/3166/lv11.jpg
On Friday, the BLS released its Job Openings and Labour Turnover Survey (http://www.bls.gov/jlt/) statistics, which is basically a measure of the overall amount of job vacancies in the economy. This is data collected from retailers, manufacturers, employers, etc. Along with these numbers is the Beveridge Curve (http://en.wikipedia.org/wiki/Beveridge_curve), which depicts the relationship between the unemployment rate (Unemployed Persons / Labour Force) and the Job Vacancies Rate (Job Vacancies / Labour Force). Which looks something like this:
http://upload.wikimedia.org/wikipedia/en/5/56/Economics_beveridge_curve.png
As the chart shows, the curve generally slopes downward bowed towards the origin. The logic behind the downward slope details that when there are lots of vacant jobs unemployment must be low. Unemployed persons generally fill the gap in empty positions. The changes in the degree (shown in the chart) details the direction the labour market is taking. If the curve shifts to the right, it is vindictive of higher unemployment and higher job vacancies, which indicates 'increasing inefficiency' in the labour market. If the curve shifts to the left, it means that there is lower job vacancies and lower unemployment.
The curve looks exactly like this. From JOLTS (http://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf):
http://img62.imageshack.us/img62/3259/0zfw.png
As you can see, the curve is shifting to the left, which entails increased market efficiency. However, the job vacancies rate has been relatively high given the current unemployment rate. The number of unfilled jobs implies that the unemployment rate should be around 4.5% or 4.7%. Empirically, the overall increase in unemployment will decrease with the number job vacancies. However, some jobs will remain unfilled even with high unemployment due, as the labour force doesn't match the skills employers require. This is an indication of an increase in what is called 'Structural Unemployment.'
Consider the interactive graph I've presented by Bloomberg (http://thepoliticalforums.com/threads/18641-A-Dummies-Guide-To-Employment-Data-Quality-Over-Quantity):
This chart shows how different sectors of the economy contributed to overall changes in private employment. A standout: well-paying, middle-class jobs in manufacturing and construction have evaporated in two huge waves...
...while jobs in education and health care have grown steadily over the years, even during recessions.
Manufacturing and construction workers have lost millions of jobs during recessions -- and subsequent economic rebounds haven't brought all of those jobs back. There are about six million fewer people working in those sectors than at the peak in the year 2000.
Although the decline in manufacturing and construction jobs has been partially offset by the growth in health care and education positions, those industries pay significantly less -- meaning that many consumers' wages and spending power have decreased.
More recently, the lowest-paid sectors of the economy -- leisure, hospitality and retail -- have been driving job growth.
Bloomberg (http://www.bloomberg.com/dataview/2013-11-08/what-the-jobs-report-really-means.html)
Moreover, we can concluded what is happening to the overall economy that these jobs are remaining unfilled and individuals would rather leave the labour force than take these vacant jobs. We can also calculate that the unemployment rate should be much higher, given the amount of people who should be in the labour force but is not concluded among the U3 unemployment statistical category.
Come up with whatever excuse you what: Obamacare, Dodd Frank Regulatory Requirements, Unemployment Benefits, Minimum Wage, etc. Given the amount of job openings, the implied/actual unemployment rate is a far cry away from 7.3%.
Related Post:
A Dummies' Guide To Employment Data: Quality Over Quantity (http://thepoliticalforums.com/threads/threads/18641-A-Dummies-Guide-To-Employment-Data-Quality-Over-Quantity)
http://img837.imageshack.us/img837/3166/lv11.jpg
On Friday, the BLS released its Job Openings and Labour Turnover Survey (http://www.bls.gov/jlt/) statistics, which is basically a measure of the overall amount of job vacancies in the economy. This is data collected from retailers, manufacturers, employers, etc. Along with these numbers is the Beveridge Curve (http://en.wikipedia.org/wiki/Beveridge_curve), which depicts the relationship between the unemployment rate (Unemployed Persons / Labour Force) and the Job Vacancies Rate (Job Vacancies / Labour Force). Which looks something like this:
http://upload.wikimedia.org/wikipedia/en/5/56/Economics_beveridge_curve.png
As the chart shows, the curve generally slopes downward bowed towards the origin. The logic behind the downward slope details that when there are lots of vacant jobs unemployment must be low. Unemployed persons generally fill the gap in empty positions. The changes in the degree (shown in the chart) details the direction the labour market is taking. If the curve shifts to the right, it is vindictive of higher unemployment and higher job vacancies, which indicates 'increasing inefficiency' in the labour market. If the curve shifts to the left, it means that there is lower job vacancies and lower unemployment.
The curve looks exactly like this. From JOLTS (http://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf):
http://img62.imageshack.us/img62/3259/0zfw.png
As you can see, the curve is shifting to the left, which entails increased market efficiency. However, the job vacancies rate has been relatively high given the current unemployment rate. The number of unfilled jobs implies that the unemployment rate should be around 4.5% or 4.7%. Empirically, the overall increase in unemployment will decrease with the number job vacancies. However, some jobs will remain unfilled even with high unemployment due, as the labour force doesn't match the skills employers require. This is an indication of an increase in what is called 'Structural Unemployment.'
Consider the interactive graph I've presented by Bloomberg (http://thepoliticalforums.com/threads/18641-A-Dummies-Guide-To-Employment-Data-Quality-Over-Quantity):
This chart shows how different sectors of the economy contributed to overall changes in private employment. A standout: well-paying, middle-class jobs in manufacturing and construction have evaporated in two huge waves...
...while jobs in education and health care have grown steadily over the years, even during recessions.
Manufacturing and construction workers have lost millions of jobs during recessions -- and subsequent economic rebounds haven't brought all of those jobs back. There are about six million fewer people working in those sectors than at the peak in the year 2000.
Although the decline in manufacturing and construction jobs has been partially offset by the growth in health care and education positions, those industries pay significantly less -- meaning that many consumers' wages and spending power have decreased.
More recently, the lowest-paid sectors of the economy -- leisure, hospitality and retail -- have been driving job growth.
Bloomberg (http://www.bloomberg.com/dataview/2013-11-08/what-the-jobs-report-really-means.html)
Moreover, we can concluded what is happening to the overall economy that these jobs are remaining unfilled and individuals would rather leave the labour force than take these vacant jobs. We can also calculate that the unemployment rate should be much higher, given the amount of people who should be in the labour force but is not concluded among the U3 unemployment statistical category.
Come up with whatever excuse you what: Obamacare, Dodd Frank Regulatory Requirements, Unemployment Benefits, Minimum Wage, etc. Given the amount of job openings, the implied/actual unemployment rate is a far cry away from 7.3%.
Related Post:
A Dummies' Guide To Employment Data: Quality Over Quantity (http://thepoliticalforums.com/threads/threads/18641-A-Dummies-Guide-To-Employment-Data-Quality-Over-Quantity)