(cross-posted at ProgressiveFix.com and FrumForum.com)

When it comes to economic conditions, I'm generally a glass-three-quarters-full kind of guy.  Take unemployment.  Quick—what was the risk in 2008 that an American worker would experience at least one bout of unemployment?  Chances are you thought that that risk was higher than one in eight.*  But figures from government surveys indeed suggest that thirteen out of fifteen workers (or would-be workers) had not a single day unemployed during the first year of the "Great Recession".** (Incidentally, the recessions of the mid-1970s and the early 1980s were also called the "Great Recession" by some commentators.)

The 2009 data won't be out until later in the year, but if last year ends up comparable to the depths of the early 1980s recession, then the average worker will "only" have had a seven in nine chance of avoiding unemployment.***  But these figures overstate economic risk because some unemployment is voluntary and much of it is brief.  According to the Congressional Budget Office, the chance that a worker experienced an unemployment spell lasting more than two weeks during the three years from 2001 to 2003 was just one in thirteen—a period covering the last recession.

So as I've been following the debate about unemployment insurance and whether it actually worsens the unemployment rate, I've actually been open to the idea that being able to receive benefits for up to two years might create perverse incentives.  The research is not as uniformly dismissive of the idea as some liberal assessments have implied (go to NBER's website and search the working papers for "unemployment" if you want to check this out yourself).

In particular, the idea that there were 5 people looking for work for every job opening struck me as sounding overly alarmist.  So I started looking into the numbers to determine whether I thought they were reliable.  The figures folks are  using rely on a survey from the Bureau of Labor Statistics called the Job Openings and Labor Turnover Survey, which unfortunately only goes back to December of 2000.  But the Conference Board has put out estimates of the number of help wanted ads since the 1950s.  Through mid-2005, the estimates were based on print ads, as far as I can tell, but the Conference Board then switched to monitoring online ads.  You can find the monthly figures for print ads here and the ones for online ads here.  The JOLT and unemployment figures are relatively easy to find at BLS's website.

When I graphed the two Conference Board series (which requires some indexing to make them consistent--the print ad series being an index pegged to 1987 while the online series gives the actual number of ads) against the number of unemployed, and then the JOLT series against the unemployed, here's what I found:

I'll just say I was shocked and that I am much more sympathetic to extension of unemployment insurance than I was yesterday.

*The post originally said one in ten, which was wrong (the result of mistakenly using a figure I had computed  for an older age range).  Technically, the the figure was 13.2%, or 1 in 7.6.
** The original post said nine out of ten.
*** The original post said that if it reaches the depths of the 1990s recession, then the average worker will have had a five in six chance of unemployment.  I located data for the early 1980s recession, which is a better comparison to the current one.
7/13/2010 02:22:40 pm

This is made worse by the fact that the unemployed are being shunned by employers AND competing with employed people. Theoretically the new opening created when an employed person gives notice and moves to another job would be filled. However, I know that isn't always the case - companies are trying to "make do" with fewer employees by spreading out the work done by those whom remain behind. And that isn't counted in any government statistic, or not neatly anyway.

John Quiggin
7/13/2010 05:29:46 pm

I'm missing something. The summary in the link gives the unemployment experience rate for 2008 at 13.2 per cent. Where do you get one in ten?


7/13/2010 07:40:09 pm

Fixed--see notes above and additions. Thanks John, and apologies for the mix-up.

nancy jean
7/14/2010 12:59:32 am

the longer-term unemployment rate is overwhelming in hard-hot states; like the sunbelt.
national averages that take into account non-bust states (like wash d.c. area/federal salaries) dilute the true depression conditions. Florida is my home and is beyond description - entire career fields are decimated and these workers are not easily transferred into other areas. the real unemployment rate in many areas is more than 25%.
thanks for not being cavalier about this. we are slammed, and we are hurting.
(BTW, I have never drawn a cent of unemployment, I was a 1099 freelancer.) currently eating my retirement fund and being foreclosed.
the indifference to us in the "hey, it looks better" Obama admin. is shattering. the failure of HAMP is example one: 55% of all mtgs. in central Fla. are underwater.

7/14/2010 02:13:00 am

The Sun Belt sates are particularly effected because they got the most job growth from the direct and indirect effects of the mortgage/real estate boom. That was a one trick pony and on a systematic basis it just represents those areas going normal. The credit driven one trick ponies of the rolling bubbles of the last 25 years were designed to mask the employment problem growing out of wealth inequality guarantee. There is no longer any political need to mask the employment problem with bubbles or incomes policies.

The relative income and then asset equality of the 40's through the 70 was driven by highly progressive tax rates. America wants lower taxes and more income and asset inequality and that is what our politicians have delivered. The period mentioned above was not normal but an aberration and now we get back to normal.

Surely jobs will get to more normal numbers but at lower wages for the bottom half or more. The desperation for jobs is the medicine necessary to force people to work for less. Don't go all wobbly about this.

Eric Blair
7/14/2010 02:55:31 am

The "relative" income and asset equality of the late 40's through the 70's was an artifact of WWII, not any sort of 'progressive' policies.

(although I suppose one might call the GI Bill progressive. YMMV)

7/14/2010 04:36:29 am

Are you kidding? If having a 1 out of 7.6 chance of losing your job strikes you as healthy odds, you must be on crack. When you say that a worker had "only" a seven in nine chance of avoiding unemployment, I can't imagine what you mean by putting quotation marks around "only". Unemployment really sucks, and a sucky outcome that happens to over ten percent of the population in a relatively short period of time is a very serious matter.

As an aside, I'm not sure why "Eric Blair" attributes relative income equality of the mid-20th c. to WWII rather than to the great depression or to the progressive policies the depression led to...

7/14/2010 04:49:12 am

Scott, this analysis is interesting, but it is like inspecting the trees but you didn't see the forest. U-6 unemployment is at 16.5% for June, 2010. Also over 650,000 people stopped looking for jobs in June, 2010. As a result, over 1 million people, the past 2 months, have dropped out of the labor pool. June, 2010 retail sales are down, which makes 3 months of dropping retail sales. California and Michigan are tied at 21.7%(U-6). This is the true picture and Obama is claiming he saved 3.6 million jobs-liar.

7/14/2010 05:16:56 am

hstad, your calling the president a liar assumes that the picture would not be significantly worse had his policies not taken effect.

7/14/2010 07:23:45 am

Actually, the Conference Board still calculates the help wanted index for print ads, but they don't publish the results. The data are available by request for research purposes.

Probably the reason your line using the online series is lower than the line using the JOLTS series is that your indexation implicitly assumes that print ads and online ads rise (and fall) at the same rate. In fact (as you will realize) online ads have risen much faster (and fallen more slowly) in recent years, as the market for help wanted advertising has gradually shifted online in a move that is more or less orthogonal to the business cycle. So when you switch to the online series during the last part of the chart, you are capturing more of the rise and less of the fall, thus ending up with a series that shows more job openings (relative to earlier data) than actually exist.

7/14/2010 08:56:57 am

Mike, I agree with you but the "what would have happened" game is a pointless excercise. No one really knows and people are going to believe what they want to believe about it so there's no chance of convincing someone who already doesn't like Obamas policies that he saved jobs - confirmation bias will cause them to seize on whatever "evidence" they can find that he didn't and ignore the evidence that he did.

Sadly, even with 5 seekers per job opening we still have buffoons like Corbett lying about hearing "lots" of complaints by employers who can't find new hires because all the potential workers are too busy enjoying unemployment benefits. There is no f-ing way he has heard lots of these complaints. His statements are a clear cut case of people making up facts to support their already-held beliefs.

7/14/2010 01:28:39 pm

Mike, I'm not assuming that at all. I'm calling Biden a liar because he doesn't know how many jobs have been saved or created. What I am assuming is that the states who benefited from the federal funds kicked the can down the road and did not make the decisions for themselves. What a waste of money.

7/18/2010 04:34:19 am

After 18 months on U.I. I have had three interviews. I have one tuesday in another county. Normally there's usually 10-15 apply there was 300 applicants.Can't understand why. we've been told how lazy we are and we don't really want to work..for those of you who tink we just sit around..go F...yourselves...

7/18/2010 11:25:08 pm

Need some advice. Got a job offer out of state 2.5 hrs from home and spouse (works there). Would need to set up temp. residence in new state while keeping home and husband in other state. It is a situation many have been in I am sure.

The job is 1 notch lower than previous position (thrown out of hat job becasue new CEO wanted to bring in his boys).

I am currently on unemployment fro 2 months. My husband is not supportive. he has recently found religion and is thinking I should only accept job locally. I have never truly trusted his judgement. He is very right wing and cannot possibly understand a female unemployment experience.

The job would be 100K plus ans with stable company.

8/3/2010 05:36:24 am

I've have a master's degree and have worked in the IT industry for over 20 years. This is absolutely the worsted economy that I have experienced.

Between off-shoring of jobs to India/China and the importing of H1B green card workers, the IT employment market has totally collapsed. Major US companies are advertising "phony" jobs openning to be able to "hire" non-US workers with job requirements customized to a foreign workers resume.

Journalist need to investigate these practises used by HR departments and the US government needs to stop these practises and stop taking money to look the other way.


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