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  • No JOLTS in Job Creation

    Unemployment has risen sharply during this recession and has almost reached 10 percent of the workforce. However policy makers have paid relatively little attention to why unemployment has risen so sharply. With so much coverage of the collapse of the auto industry in Detroit, the finance industry in New York, and the deflation of the housing bubble nationwide much of the press has focused on job losses. And there is a lot of truth to this. Layoffs have increased significantly since the start of the recession. But that is not the whole story, or even the biggest part of the story.

    Data released today by the Bureau of Labor Statistics sheds light on why unemployment has jumped so sharply. The latest release of the Job Openings and Labor Turnover Survey (JOLTS) shows that lower job creation is the bigger – and largely untold – story behind rising unemployment.

    News coverage leads many Americans to believe that the economy is losing hundreds of thousands of jobs a month. This is not true. In fact the economy is losing millions of jobs each month – at the same time employers create millions more. The monthly job losses figures are net job losses: the difference between all the jobs created and those jobs lost. Total job losses are an order of magnitude higher. For example, 4.3 million American workers left their jobs in August – 2.3 million laid off or discharged and other 2.0 million quit or retired. However, employers also hired 4.0 million Americans at new jobs that month. The 236,000 job difference (with no rounding) between these figures is the figure reported in the press.

    Since the recession began at the start of 2008 layoffs have increased. However, less reported in the press, new hires have fallen even more. Look at the data.

    In the last quarter of 2007 – the last quarter before the recession – employers laid off or discharged an average of 1.9 million workers a month. By August 2009, the most recent data available, that figure jumped to 2.3 million workers laid off. Layoffs have increased by 400,000 workers a month since the start of the recession.

    However, job creation has fallen by even more. The number of job openings at the end of each month has fallen to its lowest level since the government started the JOLTS survey. And hiring has fallen sharply. In the last quarter of 2007 employers hired an average of 5.2 million new workers a month. By this past August new hires fell to 4.0 million workers – 1.2 million fewer new jobs created each month.

    In part both these figures reflect the fact workers become a lot less likely to quit in a recession. Fewer workers voluntarily leaving means employers need to hire fewer replacements. It also means that they must fire workers who proved poorly suited to their jobs and who – in a better economy – would have voluntarily left. But a large portion of this change in hiring and firing is real – as attested by fact that the median time workers stay unemployed has doubled. Workers have much greater difficulty finding new jobs now and this is driving unemployment higher. Unemployment will not fall until businesses start creating more jobs.-

    Unfortunately, the enormously expensive “stimulus” package that the President passed does little to address this problem. Spending $800 billion on government programs does not encourage entrepreneurs to start new businesses or businesses to expand operations. It does not encourage the risk taking and innovation needed to grow businesses and create jobs. All it does is spend a lot of money on traditional liberal priorities.

    Posted in Economics [slideshow_deploy]

    12 Responses to No JOLTS in Job Creation

    1. Va Engr says:

      Note to interested parties, as sent to my representative:

      I just received from the Va Dept of Taxation a notice that I wanted to bring to your attention, not as much for my particular situation, which I prefer to work through normal channels if at all possible, but for the situation our commonwealth and nation are in.

      First of all, a little background, though. My wife and I are both working full time jobs, raising a family of 5 children. We have met our obligations to the best of our ability through the recession, and intend to continue doing just that.

      We own a rental property out of state. We had a primary residence out of state as well when we came back home to VA about 2 1/2 years ago. It took us several months to sell the primary residence. The rental property is currently rented, and still for sale. Since we have moved back to VA, we have made as much as 3 mortgage payments out of pocket, on time, many months over these years.

      We have had to cash in my 401k to meet our obligations. There was some discussion by our elected officials about reducing or eliminating penalties for early withdrawal from retirement plans. As best we can tell, our representative government does not think we are having enough hardship yet. We have been assessed penalties for the early withdrawal from the 401k, and are working through the process of paying what we 'owe' the commonwealth and federal government. By the way, I cannot say that this would encourage me to reestablish any kind of retirement account with any government ‘help’ or strings attached to it. The cake looked and tasted good, but man, did it ever have an afterbite!

      I am employed in the engineering and surveying field. Our industry has been hit very hard by the recession, as most of my peers can attest. Many firms are closing their doors and laying off staff. We have had a very limited workload, and could have probably justified closing the doors and filing for unemployment. I do not want to do that. I am able to work, and intend to continue doing just that as long as I am able. We had a nice garden this summer, and are doing all we can to be effective managers of all that we have been entrusted with. We also meet our obligations consistently, as our commonwealths tax records will show, among others.

      Back to the notice that I mentioned earlier. This notice to my employer says that all my wages are subject to lien to pay my taxes assessed. I learned a saying when I was fairly young that I think you can apply to this situation. The saying goes ‘you can’t get blood out of a turnip’. You can assess all the taxes you want, but there really is a limited capacity to pay, at least here.

      I look forward with great interest to your response, again, not just for my situation, but for the commonwealth and the nation.

      Sincerely,

      VA Engr

    2. D.R., Orlando, FL says:

      VA Engr – I am so sorry for what's happening. Unfortunately, it is happening more and more to every honest American who live their lives with honor and integrity. My sister and her husband will be probably be closing their contsruction business within the next six month, putting almost 100 people out of work. The construction business and many othrs have been smashed by the irresponsible congress people we elected to office and then allowed them to dismantle our economic infrastructure without a peep of protest. My sister and brother having been paying many salaries out of their own pocket to try to keep good and loyal employees from the unemployment lines. They won't be able to do that much longer, but it is breaking their hearts.

      I'm beginning to believe that common sense was wiped out of all our government, from the local to the federal, when Ben Franklin died.

      I'll keep you and your family in my prayers

    3. Bobbie Jay says:

      It is worse then sad to hear of government intervention and regulation and taxation and mandation, destroying the private sector. Unless government is stopped, I'm sure Obama has plenty of jobs lined up and waiting for the ultimate collapse, or sooner, of the private sector. The recession is brought to us by government ignorance, deception, greed and control.

    4. John Roane Sarasota says:

      If it is the government’s goal to end private business, land ownership and begin indoctrination through voluntary service.

      First they cash the economy, create emergency situations in health, food and security. Then come to the rescue through Marshall Law, restrict movement of people, material and food. Next you would hear, “I am from the Government and here to help you”.

      The rest is easy you will follow like lemmings. Of course this would never happen in America.

    5. Tim Az says:

      Some people are beginning to see exactly what the liberals are up to. Still others, And this article is a perfect example continue to make excuses for the left claiming they just don't know what they are doing. They know exactly what they are doing and exactly how to get there. If you can remove all the weath from the private citizens. Eventually the citizenry will iether starve or accept their own enslavement to their own government. Do we really have time to play these games with each other? How's that hope and change working out for you?

    6. Lloyd Scallan - New says:

      The Obama Plan to destroy this country is working to perfection, aided by the left-wing, liberal news media that's in Obama pocket. The Media will

      not report the truth about job loss or the state of our ecomony, nor any news that negatively reflect on Obama or his policies, just as they did during the campaign.

    7. Jeanne Stotler, Wood says:

      My sons are in the surveyor field in Fla. one owns his own bus. the other had worked for over 20 yrs. for a firm. Last Nov. the younger one was laid off, called a furlough, he has a son in HS, 1st yr.now an ill wife a mortgage, due to this furlough he was forced to seek work out of state, since last year he has been in Louisianna, he came home for Christmas and was home last month for three days,looking for work closer to home. The other has laid off most of his workers as there is little work, to make ends meet and take min. pay for himself he goes in the field himself, he wonders mon. to mon if he can survive, his house is paid for but the company rent and vehicle cost are still there. Sure wish Bush was still Gov. I've two other children in Fla.so far no affected, one is wife of an atty., the other is in the food bus. and his wife is an acct. Florida is hard hit by this administration although they say it is G. Bush's fault??

    8. Leon, Durango, CO says:

      Statistics lie in six different ways! The old jobs in manufacturing, mining and energy are not the same as the new jobs in convenience stores, part time and in hotels. The unemployment statistic doesn't count people who can't find work for so long they have 'given up'. Construction is gone, the Feds are restricting drilling in Utah, so what? Shall we all go into the fields and pick tomatoes? Get a short term job and count that the same as a solid long term manufacturing job.

      Obama should get the Nobel Prize for liars. He is the best the world has ever seen.

    9. Denise Utah says:

      Well, I guess Obama meant hype and chains instead of hope and change. Anyway, those who believe in socialism and The Nanny State should know that for the government to give all, it first must take all. Expect your taxes to go way up to pay for all the planned give aways the Democrats are pushing through Congress. Universal Health Care, Cash For Clunkers, home mortgage bailouts, Cap and Tax are all a form of income redistribution. It will soon be that everyone will lose the incentive to work because the government will tax it all away from them. Which reminds me of a quote by Winston Churchill. "Socialism is a philosophy of failure, the creed of the ignorance, and the gospel of envy, its inherent virture is the equal sharing of misery,"

    10. R Morini New Hampsh says:

      Best of luck VA Engr!!!! Keep the garden growing, (with lots of turnips!!!).

    11. Linda Carlsbad, CA says:

      VA Engr, good luck to you and your family. If the government would have stayed out of our business we would have jobs now. We could help you and your family. But they are killing all of our jobs, so we have to depend on the all mighty government. This is their plan! Destroy everyone so we can't help each other.

      In California they turned our farmers water off. The farmers provide 53% of our food. Now, they have to depend on the government. The state can't support the thousands on aid, and asked the Obama administration for federal help. They told them NO. I don't get it, Communists don't eat!

    12. Jerry from Chicago says:

      To VA Engineer — I am sorry to learn of your trouble. Unemployment has become an epidemic. Those who are still employed are scared to death that they could be next. Consumer confidence is at an all time low. Even those of us who still have a few bucks to spend and who would like to buy a new car, or new appliances for our home are afraid to make any major purchases and are holding on to every extra dollar we have for fear of losing our job.

      There are literally hundreds of thousands of people who work in the health insurance industry, in one capacity or another. I can tell you that each one of them is afraid of losing their job to government national health care. They have been vilified by their own government and their President as being "the reason that health insurance costs so much". These are honest hardworking people, just like you, who are trying to support themselves and their families.

      I still remember Hillary Clinton's comment, made at a press conference years ago when she was hyoing national health care, to a lady who worked for a health insurance company. The lady asked Hillary was people like her were supposed to do if the government took over health care. Hillary's comment, "anyone obviously as smart as you should have no trouble finding another job".

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