The unemployed aren’t the only ones seeking jobs

Work with me here. In normal times, say 2004 through 2007, suppose 10% of the working population are looking for jobs while still employed (do you know of a better estimate?). This means about 13 to 14 million employed workers are “job seekers” in normal times.

“Quits” are voluntary separations from jobs and folks do that because they’re leaving the work force (e.g. retiring) or because they found another job. Now look at quit rates over the last couple of years:

Quits have declined by about 40% compared to normal times. From here, about 50% of quits are retirements. If the retirement rate has stayed the same, then quits due to job changes went from 1.1% to about 0.5%. This suggests the number of “job seekers” among the employed has gone down by at least half.

How many job seekers are there right now? Supposing all unemployed workers are “job seekers” then the total number is about 20 million people. In normal times, that number is about… 21 or 22 million people (unemployed plus 10% of the working population). By this measure, the job market now is less congested than usual!

Making the assumptions that I made above, I constructed a “job seekers” per job opening time series:

If you assume none of the currently employed workers are “job seekers” then the graph above looks like the one put up by EPI. If you assume 20% of the currently employed are “job seekers” then even the up-tick seen in the later part of the time series goes away.

8 thoughts on “The unemployed aren’t the only ones seeking jobs”

  1. In general, this is just a terrific insight. The BLS should be looking at seekers as a percentage of the already employed.

    Specifically, have you been following Arnold Kling’s discussion of a Minsky-Jones economy:

    It seems to me that you’ve identified a seekers-openings equilibrium of some kind that would support his hypothesis. But it’s just an intuition. Haven’t had time to work through the logic in detail. Might be a nice paper for you though.

  2. There’s a literature in search theory on on-the-job search that you should look at. (OJS)

    “In February 1999, 4.5 percent of employed wage and salary workers
    had actively looked for a new job in the prior 3 months” For 1997, it looks like 5% of employed searched.

    Also, right now, the plunge in vacancies has to make OJS much less attractive, so if anything, the amount of OJS is lower now. So I think 10-20% OJS is far overestimated.

  3. sraffa, thanks for the data. Labor market dynamics are waaay complicated.

    My post should have been the shorter “EPI mislabels their unemployment to jobs graph as ‘job seekers’ per job posting” and been done with it. That said, people like Brad Delong seem to reference this number as sufficient statistic for labor market tightness. That’s not true because of the point I made about on the job search being pro-cyclical and your point about retirements being counter-cyclical. You have to take these things into account because their magnitudes are so large as to overturn “common sense”.

  4. push- Yeah, the labor market dynamics are really complicated. But I’ve been getting into search theory recently, it’s really good stuff and definitely should be much more important in macro than it is currently.

    I think you’re on to something, but I don’t know that OJS is enough to overturn the fact that the labor market is very loose right now. It’s enough to weaken the perceived market looseness a lot though.

  5. The interesting economics is explaining the cyclicality of on the job search and retirements. I guess this can be explained by cyclical changes in the cost of search (the second fact being an implication of life-cycle effects). However, its the question of why costs change that’s interesting to me: does the market get more crowded during recessions OR do real wages drop enough to make the value of search low OR something on the demand side OR something else. The first theory would have problems explaining large seasonalities in job search (i.e. new college hires and summer temp work).

    If someone hasn’t done the first paper with exogenous cost changes, we should do it.

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