Job Openings And JOLTS Crossed Signals

The updated JOLTS numbers for September just confirmed more nonsense on the part of the BLS. Job openings continue to be all their own while the rest of the data series, even as the whole is indexed to the CES, at best stagnates. On every other count, including hires and quits, there is something drastically different in the US labor market. The view from Job Openings, however, instead is quite imitating of the Beveridge Curve which is, in my view, a significant clue as to what might explain the growing discrepancy.

After declining last month by nearly 300k, “job openings” rose149k in September to nearly match July’s record. As you can see below, this data series took an unusually sharp turn starting with 2014’s Polar Vortex.

There was a similar increase at that time in “hires”, though of not nearly the same magnitude. In short order, the surge in job openings far, far outpaced hires not just in terms of the recent cycle but out of all proportion with the entire prior series. That discrepancy has only become much worse in 2015 as the estimated rate of new hires has languished quite conspicuously and below the prior 2005-07 cycle peak.

The BLS’s own estimate of labor flexibility, the quits ratio, has similarly stagnated with hires rather than confirming of job openings. If there were such a massive and unprecedented surge in actual job openings you would expect far, far more labor turnover as employees turn greater opportunity to their advantage. Similarly, you would expect a sharp rise in the labor force as those opportunities apply equally to those still, courtesy of this “recovery”, on the sidelines.

Neither is occurring, as you can see plainly above in the quits ratio and what the BLS reported for the “perfect” October jobs report that still shows a shrunken labor force for 2015. However, if you plot the job openings “rate” (as defined by the BLS) it still quite visibly fits within orthodox expectations for what the labor market “should” look like as outlined in the Beveridge Curve. Since the official unemployment rate remained steady at 5.1% in September, the increase in job openings continues the downward sloping track (or, more specifically, upward sloping from right to left).