The Jobs Picture

Ed Lazear, an economics professor who teaches at Stanford’s business school, had an op-ed in the January 20th issue of The Wall Street Journal entitled “The Jobs Picture Is Still Far From Rosy”.

… An improving situation isn't the same as a good situation. The labor market is still very depressed and is likely to remain so for quite some time. …

… Hires need to increase by over 30% to get back to 2007 peak levels.

…

There is one other troublesome factor. The labor market is fluid, and each month about as many workers are hired as are separated from their previous jobs. The hiring that occurs to replace lost workers is called churn. As James Spletzer of the Bureau of Labor Statistics and I show in a forthcoming article in the American Economic Review, churn hiring accounts for about two-thirds of all hiring. Churn is generally good for workers and good for the economy because workers move to better, higher-paying jobs where they are more productive. The typical wage increase when moving to a new job is around 8%. But churn is down by over 35% from the pre-recession level during the last quarter of 2007.

This means that even people with jobs aren't doing as well as they should be. Because of the slack labor market, many are stuck in their current jobs, earning less than they would in a vibrant economy.

These are similar conclusions to the powerpoint presentation on JOLTS data I’ll cover in class.