Optimistic About Jobs in 2014?

This month's unemployment report looked surprisingly rosy for once. The official U3 Unemployment Rate finally slipped below 7%, for the first time in about half a decade. It's true we're understating that number by a lot, but, but, BUT at least the direction is holding for once!

There's a lot of hires, but as you can see from Calculated Risk, we actually have a lot of quits. Sounds bad, but that is a positive thing. Taking a look at the graph, you can see quits bottomed out in the depth of recession: if you think there are no other jobs out there, you aren't going to leave your current one, even if your boss sexually harasses you, snorts coke, or keeps you at an entry level job for a decade.

It's still way, way, way low. The quits are at the same level as "jobless recovery" levels back in 2003, but, again, it's a solid trend upwards. We are still about a sixth below peak quit levels.

I wouldn't be surprised to see this trend continue. Unemployment benefits have expired, and though Congress might make some progress on that front (especially with the Republicans more conciliatory this year), I would expect to see some marginal improvement in the employment situation of the Long-Term unemployed.

We're still showing some positive business growth. Industrial production is trending up. And while companies might LIKE workers to work more hours, they can't really get them to do that: the hours worked holds steady.

So companies will increase production, hire more workers, and some more people will try finding work this year. Not to mention a lot of people quitting their jobs and trying to find new ones. Might actually be good for wages, too!

It's not all roses, though. We have a huge long-term unemployed group, about 39% of the total unemployed. Going off Japan, it looks like there will be a permanent shift towards more part-time workers. We can't be sure about that, though. The United States has been a more flexible work-place for quite some time. Indeed, while temp jobs HAVE gone up, they have only gone up to the proportion they were BEFORE the recession...a lot of people who lost jobs in the first place were the so-called temp workers.

Most importantly, they are not spiraling out of control, but peaking out. This to me suggests that you might want to view temp jobs as a leading indicator, which will lead to more aggressive full-time hiring this year and next year.

But 2014 will be an interesting test of that.

In the mean-time....cautiously optimistic.


-Robert

Some trippy stuff, by Nicholas Kaldor

So, for awhile now, Nicholas Kaldor has probably been among my favorite economist as far as originality of thought and brilliance goes, and this passage right here blew my mind, written in 1971.

"… Some day the nations of Europe may be ready to merge their national identities and create a new European Union – the United States of Europe. If and when they do, a European Government will take over all the functions which the Federal government now provides in the U.S., or in Canada or Australia. This will involve the creation of a “full economic and monetary union”. But it is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) “as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without”. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it."

Wow. Predicting the formation of the EU (which happened 20 years later) and warning that IF this formation was only monetary and not fiscal+political, it could fall apart and lead to a breakdown of the European project. Amazing. And I thought Wynne Godley was pretty prescient.

'Tis unfortunate that Friedman, and not Kaldor, had the larger microphone.

Anyhow GV, Remi, you still there and you feel like restarting up this blog? I'm pretty sick myself of the BR and GV just got banned there, so.. yeah.