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