Another clue to what’s happening in the labor market is the vacancy
rate. Although less widely followed than unemployment figures, this rate
is its mirror image. To compile the unemployment rate, the Bureau of
Labor Statistics surveys households to find workers without jobs. To
compile the vacancy rate, the bureau surveys employers to identify jobs
without workers. In short, the vacancy rate measures the percentage of
available jobs that are currently unfilled.
Not surprisingly, the vacancy rate is highly cyclical. In recessions,
when customers are hard to find, businesses post fewer new jobs. In
addition, because the number of job seekers expands, the posted openings
are filled quickly. As a result, the vacancy rate falls. Conversely,
when the economy recovers, businesses start posting new openings, and
jobs are harder to fill, so the vacancy rate rises.
The recent recession is a case in point. Seven years ago, the vacancy
rate was a bit over 3 percent. It fell to a low of 1.6 percent in July
2009, a month after the official trough of the recession. The most
recent reading puts it at 2.8 percent. So according to this measure of labor-market tightness, the economy is almost back to normal.
Let us examine the statements and numbers and let us see what may be wrong with this logic.
1. We know that the percent of the population employed has dropped precipitously. We have been noting that for five years now. Others seemed to ignore it for the first three years but since I am not an economist I deal with the facts, all the facts.
2. The percent unemployed is a floating and relative number. It helps get to the real number if and only if you know what the real number should be. To me it should be the percent of the population employed before the Recession adjusted for the increase in population.
3. Now the vacancy rate means nothing more than what industry demands. It is a meaningless number and reflective more of productivity than the ability of the economy at large to absorb workers. We may have a 20% vacancy rate if we had massive productivity gains and got rid of 40% of those employed and we may never fill it if the demand is for people who can do real things. Like engineers, electricians, even plumbers, but not fine art majors and not economists.
4. Thus to make any nexus between the total percent of the population employed, the employment vacancy rate, and the economy is specious at best. With the massive improvements in productivity we see less people required to be employed and those in demand have talents which are also in short supply. The work force is NOT homogeneous as one would assume if one were an old fashion economist who viewed the world of workers as factory types.
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