The following editorial appeared in the Orange County Register on Tuesday:
Two new reports are out this week that, taken together, provide a pretty good picture of how the U.S. labor force has fared since the economic recovery began in June 2009.
On Monday, the U.S. Conference of Mayors released a report, prepared by IHS Global Insight, noting that U.S. payroll employment reached an all-time high this spring, finally surpassing the prerecession peak of 138.4 million jobs, reached in the first quarter of 2008.
Then, the Labor Department reported Tuesday that there were 4.7 million job openings on the last business day in June, not only a slight uptick from May, but also the highest number of openings in 13 years.
If the reports stopped there, it would be cause for celebration, from Orange County, Calif., to Orange County, Fla. But, as a wise man famously advised, all that glitters is not gold.
Indeed, the Conference of Mayors report laments that jobs gained during the economic recovery pay an average 23 percent less than jobs lost during the so-called Great Recession.
The annual wage was $61,637 in sectors where jobs were lost in the economic downturn, which began in December 2007, while the average wage of new jobs gained through the second quarter of this year was only $47,171. “This wage gap,” said the report, “represents $93 billion in lost wages.”
As to the Labor Department’s monthly report on Job Openings and Labor Turnover — known as JOLTS — it has been held out by Federal Reserve chief Janet Yellen as an important barometer of the state of the nation’s job market.
Continued strength in the next several JOLTS reports could portend a move by the Fed to ratchet up short-term interest rates, which would be most welcomed by inflation hawks, who complain that the nation’s central bank has kept short-term rates too low for too long.
But Ms. Yellen and the Fed’s board of governors are not strictly looking at job openings. They also are looking at the number of workers who voluntarily quit jobs and the number of workers hired.
Indeed, when workers voluntarily leave their employers, it usually means they have found better — usually higher-paying — jobs. That’s a sign of a dynamic labor market. Similarly, when that nation’s employers are competing with each other to hire workers to fill job openings, it’s a sign of robust economic growth.
In June, some 2.53 million workers quit a job, the most since June 2008.
Meanwhile, some 4.8 million Americans were hired in June.
Regrettably, that quit rate was a mere 1.8 percent in June, which is trending somewhat upward, but remains at a historically low level. And, while monthly hires are trending in the right direction, they have yet to return to prerecession levels.
So, American workers are to be forgiven if they are not especially bullish about the nation’s labor market. After five years of putative economic recovery, they almost certainly expected more.