By Mike McCune –
The No. 1 paradox in the U. S. labor market today is more jobs are being listed by companies but fewer jobs are being filled.
Since June, 2010, the number of listed job openings has risen by 50%. This means for every two jobs listed in June 2010, three jobs are available today. The disconnect is fewer people are being hired to fill these openings; monthly hiring has increased less than 5% since June, 2010.(1)
If these listed jobs had been filled at even 17% faster than there were being filled in June, 2010, America would be seeing monthly hiring rates of almost half a million more than is presently being accomplished.
Who or what is to blame for this contradictory gap?
Blame a large portion of the gap on companies’ unwillingness to fill jobs they may have to cut because of the looming impact of the Obamacare regulations. If there is a single problem for the labor market it is in the details of the looming national health care bill. After studying the impact of Obamacare even unions, among the staunchest Obama supporters, are finding out how large an impact it will have on them.
“It (Obamacare) will have a devastating impact on our ability to provide health insurance,” said Terry O’Sullivan, general president of the Laborers’ International Union of North America on Tuesday. “The one thing that is not acceptable at the end of the day is our members losing health insurance or our health and welfare funds going out of business because of Obamacare.”(2)
If the unions are worried, where does that leave the rest of America’s workers? If the unions are worried, that explains a great deal of the disconnect between listed jobs and hiring because companies, in most cases, will have to make up he difference the union boss fears will bankrupt his union’s benefit package.
But even putting in Obamacare doesn’t fill the entire gap.
One line of thought is the companies are less willing to train new workers who lack the proper skill set necessary to do the job. Because of the large unemployment population, companies are trying to match an exact skill set with their needs. Peter Newland of Barclays Plc noted, “We believe this divergence between openings and hiring fits our view that the loss of employment during the recession was structural rather than cyclical in nature in many instances.”
This may be true in some cases but it leaves the inconsistent fact retail trade openings have doubled in the last three years while hiring in that sector has been flat. These jobs require little to no special skill set. So there is a gap there that Newland’s explanation does not address.
Alan Krueger, who just stepped down as Obama’s Council of Economic Advisers, observed that a wage gap is the main culprit. He thinks companies need to boost their wage scales to attract more applicants.
Another leftist solution that falls short. Companies are running on the low edge of the profit-to-earnings scale right now. Boosting pay will cut into that margin–maybe pushing the company into bankruptcy–but definitely hurting this important economic indicator. But going deeper into the numbers shows companies with 10-250 employees, the so-called small company that forms the backbone of the economy, have boosted their pay scales more than large companies.
Some job openings listed are undoubtedly filled from within existing company ranks. But a curious factor introduced by the Federal Reserve Bank of Chicago’s Jason Faberman is that companies are listing jobs with “no intention of filling them.” In other words, they advertise but unless the exact applicant falls into their lap, those openings are not going to be filled by anyone. Faberman called this phenomena a “lack of recruiting intensity.”
What is interesting is the way in which these possible explanations are digested by Wall Street and Washington.
The Obamacare worry theory is quickly dismissed despite the unions being involved and the numerous exemptions/delays already granted. The mismatch support is the strongest but seems the least believable simply because the listed jobs cannot be that exotic to turn away every applicant. The wage scale supporters are also on the side of a higher minimum wage but that theory works best on paper and not in the real world of profit and loss. The insider-filled jobs and less “recruiting intensity” theories are mirages being tossed around by people who are quickly running out of valid explanations.
The truth is more painful. We are becoming a part-time work society. The full-day, year-round worker is disappearing from American society and its economy.(3)
That means tougher days are ahead, not behind, in this recession. And what happens when the Fed begins cutting into its bond-buying program hasn’t been addressed. That $85 billion-a-month program has put us into a deeper mess than if it had done nothing. But it has still added $3 trillion to the national debt total that hasn’t yet shown on the debt clock.
Some tout the mere listing of jobs as good news for the economy. In truth, until those jobs are actually filled by breathing consumers this recovery is only living on life support.
“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson
(1)–Bloomberg News, 8-16-2013, Little Hiring For So Many Job Openings
(2)–Newsmax, 9-11-2013, Unions Vote on Changes
(3)–Personal Liberty, 7-31-2013, Irony From Obama’s Part-time World