Measuring labor market slack building the right underlying data Peterson Institute Conference on Labor Market Slack September 24, 2014

Transcription

1 Measuring labor market slack building the right underlying data Peterson Institute Conference on Labor Market Slack September 24, 2014 Michael W. Horrigan Associate Commissioner Office of Employment and Unemployment Statistics

2 Measuring labor market slack Measuring labor market slack some considerations Job Openings and Labor Turnover Survey (JOLTS) Current Population Survey (CPS) Occupational Employment Survey (OES) 2

3 Measuring labor market slack some considerations One size does not fit all Detail matters Labor force participation rates by age, sex, educational attainment Papers do not cite a lack of detail Sample size concerns? CPS questions on licenses/certification College dropout status Coverage of geography, industries and occupations Limited in household surveys 3 Varies in establishment surveys: JOLTS, OES

4 Measuring labor market slack some considerations Interpreting the data in terms of labor market theory can be difficult JOLTS reflects demand side conditions Demand/Supply views necessitate a combined establishment/household view Role of observed outcomes in the equilibrium movements of wages and employment underappreciated - OES 4

5 Measuring labor market slack some considerations Existence versus intensity Posted hires versus recruiting intensity Job search requirement for unemployment versus search intensity Two sided models needed (firm and unemployment search intensity 5

6 A FOCUS ON JOLTS DATA MIXED SIGNALS JULY 2014

7 The ratio of unemployment to job openings has fallen from 7.0 to 2.0, indicating decreasing slack in the labor market 7

8 Increasing job openings indicate a lack of slack in the labor market 8

9 Relatively low level of hires indicates slack 9

10 Openings versus hires: The role of recruiting intensity The juxtaposition of the greater level of job openings versus the relatively lower level of hires in the last two slides may reflect both slack and a lack of search intensity by firms to find workers. Haltiwanger and Davis have derived a measure of recruiting intensity to explain some of the current behavior of the labor market. They define recruiting intensity as the factors that employers vary to influence the pace of new hires, such as advertising expenditures, screening methods, hiring standards, and the attractiveness of compensation packages. Can questions on recruiting intensity be added to JOLTS? 10

11 The Beveridge Curve has shifted up and to the right 11

12 Low levels of quits indicates slack while low levels of layoffs indicates a lack of slack 12

13 Quits and layoffs move in opposite directions over the business cycle 13

14 Ratio of quits to layoffs differs considerably across industries 14

15 Final thoughts on JOLTS Measures of recruiting intensity potentially valuable Greater industry detail may provide valuable insight into the heterogeneity in the labor market There is also a lack of any geographic detail that also may provide valuable information 15

16 CPS HOUSEHOLD DATA 16

17 Civilian labor force participation rate Percent August percent The labor force participation rate, at 62.8 percent, was little changed in August and has been essentially unchanged since April of this year Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Data online at Source: Bureau of Labor Statistics, Current Population Survey, September 5,

18 Employment-population ratio Percent August percent The employmentpopulation ratio was 59.0 percent for the third consecutive month. Over the year, however, the employmentpopulation ratio is up by 0.4 percentage point Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Data online at Source: Bureau of Labor Statistics, Current Population Survey, September 5,

19 Employed part time for economic reasons Numbers in thousands 10,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 In August, the number of people working part time for economic reasons was little changed at 7.3 million. 2,000 2,000 1,000 1, Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Beginning in 1994, data reflect the introduction of a major redesign of the Current Population Survey. Source: Bureau of Labor Statistics, Current Population Survey, September 5,

20 Part time for economic reasons Numbers in thousands Part time due to slack work Could only find part time work Since the end of the recession, the slack work component of involuntary part time employment has declined, though it remains high by historical standards. The number of workers who could only find part time work remains elevated. Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey, September 5,

21 Duration of unemployment: Where do those leaving long-term unemployment go? U-E, U-N Numbers in thousands 7,000 6, weeks and over 5,000 Less than 5 weeks 4,000 3,000 2,000 5 to 14 weeks 1, to 26 weeks ,000 6,000 5,000 4,000 3,000 2,000 1,000 0 The number of longterm unemployed (those unemployed 27 weeks or more) declined by 192,000 in August. The total number of unemployed has fallen by 1.7 million over the year, with about threefourths of this decline among the long-term unemployed. Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey, September 5,

22 Likelihood of the unemployed finding employment, remaining unemployed, or leaving the labor force, 2013 annual averages Less than 5 weeks 5-14 weeks weeks weeks 53 weeks or more UE UU UN 22

23 Marginally attached and discouraged workers Numbers in thousands 3,000 2,500 2,000 1,500 1, Marginally attached Discouraged 3,000 2,500 2,000 1,500 1, Among people who were neither working nor looking for work in August, 2.1 million were classified as marginally attached to the labor force, down by 201,000 over the year. The number of discouraged workers was 775,000 in August, little changed over the year Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey, September 5,

24 Alternative measures of labor underutilization U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate) U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers U-5 Total unemployed, plus discouraged workers, plus all persons marginally attached to the labor force, as a percent of the civilian labor force plus all marginally attached workers U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached to the labor force 24

25 Alternative measures of labor underutilization Percent U-5 U-6 August 2014 U-3: 6.1 percent U-6: 12.0 percent U-4 U-3 Unemployment rate U-2 U Over the year, both the U-3 (the official unemployment rate) and U-6 measures have declined. The alternative measures of labor underutilization typically show very similar movements over the course of the business cycle Note: Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey, September 5,

26 CPS Supplements President s FY 2015 budget provides funding for a supplement to the CPS for BLS. Every other year there would be a supplement on contingent work arrangements Supplements in the off years available What additional measures are needed such as measures of job search intensity? 26

27 OES TIMES SERIES DATA

28 The potential of OES times series data OES data 1.2 million establishments Employment and wages by detailed occupation, industry down to the MSA level Not a times series currently Time series potential Year to year comparisons of the outcomes of the hiring/job search process Which occupations are experiencing rising employment and wages? Falling employment and falling wages? Mixtures of employment and wage 28 outcomes?

29 QUICK RESPONSE SURVEYS

30 Quick Response Surveys of Establishments BLS Senior Retreat Stand alone capability of drawing stratified probability samples of establishments Adding questions to existing establishment surveys What additional information is needed to inform research on slack labor markets such as recruiting intensity of firms 30

31 Contact Information Michael Horrigan Associate Commissioner Office of Employment and Unemployment Statistics