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  • Job Seekers to Available Jobs Ratio

    December has brought a small wave of positive news on the unemployment front--though much of it is better described as "less negative news." Lest we get carried away by dips in the unemployment rate and jobless claims, Economic Policy Institute economist Heidi Shierholz reminds us that the conditions are not ripe for a major shift. Shierholz points to the ratio of job seekers to available jobs, which remains above 4:1. Shierholz: To put this figure in context, it’s useful to note that the highest this ratio ever got in the early 2000s downturn was 2.8-to-1, and in December 2000, the month the JOLTS survey began, the ratio was 1.1-to-1. While the job-seekers ratio has been generally slowly improving since its peak of 6.9-to-1 in the summer of 2009, today’s data release marks two years and 10 months—147 weeks—that the ratio has been above 4-to-1. A job-seekers ratio of more than 4-to-1 means that for more than three out of four unemployed workers, there simply are no jobs. In October, there were 10.6 million more unemployed workers than job openings. Furthermore, the lack of job openings relative to unemployed workers is in no way limited to particular industries such as construction—unemployed workers dramatically outnumber job openings across the board, in every major industry. Read the full post here .

  • Laura D'Andrea Tyson on 'Anemic Balance Sheet Recovery' and Jobs Crisis

    At the Economix blog, Laura D’Andrea Tyson says that as some of the world's largest economies try to avoid a double-dip recession, it is important for policy makers to attack the jobs crisis. And the only way to make progress in fighting the crisis, she argues, is to correctly diagnose the cause: As one small-business owner told The Los Angeles Times, “If you don’t have the demand, you don’t hire the people.” And the majority of economists agree on this diagnosis. They also agree that the recovery from a balance-sheet recession can be agonizingly long, with significantly slower growth and a significantly higher unemployment rate for at least a decade. Recent data indicate that the United States is on such a course, and many economists are now drawing comparisons between it and Japan during the two “lost decades” following Japan’s 1989-90 financial crisis and ensuing balance-sheet recession. A recent study by the economist Robert Gordon confirmed that the shortfall in private-sector demand, especially the demand for consumer services, residential and commercial construction, and consumer durables, is the primary cause of shortfalls in production and jobs. Read Recovering From a Balance-Sheet Recession here .

  • Making Sense of the Latest Fed Announcement

    The Federal Open Market Committee expressed qualified confidence in the recovery. And the Federal Reserve will be keeping interest rates low, and will bring about an end of its second round of quantitative easing. From the FOMC release: Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Increases in the prices of energy and other commodities have pushed up inflation in recent months. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability. To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter. The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability. Read the full press release here . Following the FOMC meeting, Fed chair Ben Bernanke spoke in a highly anticipated press conference. And he defended the Fed's decision to end QE2, saying that the policy was "never meant to be a cure-all." Here is a video excerpt from the Wall Street Journal : And for some interpretation of Bernanke's presser, we turn to MoneyWatch , where Mark Thoma discussed the Fed's latest announcements with MoneyWatch.com editors Eric Schurenberg, Jill Schlesinger and Jack Otter :

  • Economic Outlook: Assessing the Staying Power of Near-Zero Interest Rates

    In his latest column for CBS Moneywatch , Mark Thoma asks How long will it be until the Fed raises interest rates? And he shares some helpful recent analysis from Glenn Rudebusch , senior vice president and associate director of research at the Federal Reserve Bank of San Francisco . Rudebusch has a collection of graphs that hit on seemingly all of the key variables when it comes to monetary policy decisions. From the positive trends... ...to the not so positive. Rudebusch argues that the unemployment rate is key, and that the slow rate of recovery for jobs trumps overall economic recovery when it comes to any move on the target interest rates: Given the extended nature of the expected recovery to levels of unemployment and inflation consistent with the Fed's mandate for full employment and price stability, the policy rule also suggests little need to raise the funds rate target anytime soon. Of course, this projection of future policy will change as economic forecasts are revised. Such conditionality is consistent with the FOMC's forward-looking policy guidance from its January 26 meeting, that "economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period." In the simple rule, the length of the "extended period" depends on the expected paths for unemployment and core inflation. Therefore, the downward revision over the past few months to the projected path of the unemployment rate translates into a higher path for the funds rate and an earlier liftoff from a zero funds rate. However, according to the simple policy rule of thumb, the positive unemployment news since last October appears to have shortened the duration of the "extended period" of near-zero interest rates by only about three months. Substantial monetary policy accommodation appears warranted for some time. Read all of Rudebusch's analysis here .

  • Time Cover Story: 'Where the Jobs Are'

    Time Magazine 's latest cover story bears a somewhat optimistic headline: Where the Jobs Are . But the picture is not all rosy. Assistant Managing Editor Bill Saporito checks in on companies that are hiring, and finds that some of them are having trouble finding the right people to fill jobs, even in places like Southeastern Michigan with an unemployment rate above 13%. The big takeaway from the article is that job placement experts expect the number of job openings to continue to grow: Grownups with actual work experience may be seeing more daylight. Gautam Godhwani, CEO of Simply Hired, which aggregates job openings from employment websites like CareerBuilder.com, company sites and newspapers, says his site's leading indicator is flashing green. "Before the downturn happened, we had 5 million job openings. This dropped to 2.1 million job openings in the first months of 2009, and lo and behold, in the second half of 2009 the bottom fell out of the economy," he explains. The reverse is now happening. "In the last six months we're back to 5 million jobs in our database. So there are some reasons to be optimistic." The $64,000 question is, So where are those 5 million jobs? Some of the answer is obvious. Health care and education, the perennial job comets, are doing well. But professional and business services will do well too. That's a category that includes firms like Deloitte but also office-cleaning companies. According to an analysis by Moody's Analytics for TIME, professional and business services will create some 119,000 jobs this year for bachelor's-degree holders. That's more than health care and education will create in the same category. (Health care and education will generate more jobs for graduate-degree holders than will business services.) There also seems to be a virtuous circle beginning to take shape. CareerBuilder.com reports that 27% of the companies it surveyed across all sectors plan to add salespeople, an indication that firms of all stripes see rising revenue opportunities. At the same time, they will be advertising openings in like numbers for IT and call-center jobs. "In terms of sales jobs, we've seen everything listed from a basic entry-level representative to team leaders," says CareerBuilder spokeswoman Jennifer Grasz. "The company is going out with the sales force to get new business, being supported by the IT folk, and the call center is working to keep the customers they get happy," she says . Read the full article here .

  • Today's 'Freelance Economy'

    Jobless claims keep going up, according to the latest reports from the Labor Department. And Peter Cappelli , director of the Center for Human Resources at Wharton , says workers may need to accept that the best job in today's economy may be a temporary job. And while these types of jobs tend to cost employers more than hiring people full time (as much as 25-30% more, Cappelli estimates), the uncertainty of the business climate today means employers take on less risk with temporary hires. Here's Cappelli speaking about how the recession has changed the job market (from Knowledge@Wharton):

  • Cherry-Picking Best Employees in a Recession

    Jobless claims may have dropped last week , but another the US economy still managed to shed another 565,000 jobs last week. There are few, if any, silver linings in the climbing unemployment statistics, but it does mean that small businesses that do have the resources to hire have a lot of choices and leverage. Mirela Iverac writes in Forbes that the trick is "figuring out which of those left behind were victims of the economy, and which deserved to go." Iverac cites advice from Barry Deutsch , CEO of Impact Hiring Solution s, who says that small businesses frequently hire what he calls "mismatches." How to avoid all those mismatches? As with most things, some smart work up front does the trick. First, specifically define the job you are looking to fill--generic titles are useless, says Deutsch--and quantify your expectations. Say you need a marketing director. You might require that she, within the first 30 days, assess the division, identify gaps and come up with a personal development plan for each team member; within 60 days, come up with a detailed list of potential product extensions; and within 120 days, execute a new product launch. The power of defining goals up front is that it serves as a road map for the interview, making it easier to predict whether a candidate has relevant experience and the chances she'll thrive in the new environment. Once you know what you're looking for, you have to let the world know you're looking for it. There's an art to Want Ads. One that lists a dry set of qualifications--five years of this skill, 10 years of that skill--won't cut it, says Deutsch. Read Hiring The Best Of The Left-Behind here .

  • Hiring A-Players in a Downturn

    With unemployment high and a lot of businesses cutting back on pay for those employees left, this would seem a good time for companies looking to hire. But as Seth Godin says, "if you need cheap bodies, this is your moment. But if you need amazing people, be prepared to work hard to find them." Godin points us to a compelling piece on hiring by Auren Hoffman , CEO of RapLeaf . Hoffman writes that economic downturns can make it more difficult to hire the right people, simply because there are more people looking for work. Hoffman believes in always hiring "A-players." And in the clutter of additional applicants, there are a lot of C-players available who might not look all that different from A-players on paper. So hiring the A-players take extra work. Essentially, Hoffman believes the number of A-players available remains somewhat constant. During big rounds of layoffs, companies shed C-players and B-players in greater proportion (see chart at right). So what's the answer? Hiring managers need to dedicate additional time to screening and testing applicants, or take your chances with B and C-players. Hoffman also says companies that are innovating in times when everyone seems to be playing it safe have an advantage. Some A-players are less likely to be looking to jump ship during tough times due to a risk adverse profile, security, financial reasons, or other reasons. They are happy where they are and more likely to hunker-down in tough times. On the flipside there are A-players that are MORE likely to leave. Tough times often paint companies into a corner and force them into maintenance mode rather than continuing to innovate. Great players love to innovate and usually NEED to innovate. It’s usually very hard to keep these type of A-players caged-up and thus this presents a big opportunity for recruiting. For instance, in the past it was really hard to hire great software engineers out of financial behemoths like Goldman Sachs, Morgan Stanley, and JP Morgan Chase. These companies have outstanding people and pay these people really well (often 50% above the salary at a tech company). Nowadays, even if these people have not been laid off, the great people are going to be leaving in droves. Why? Because in the next two years, it is really doubtful they will be doing anything remotely innovative. Instead they will be maintaining current systems due to the understaffed and underfunded technology departments. No fun there so expect a big exodus out of these companies. Read Hoffman's full post here .