The heartbeat of America

Here’s all the Jolts data (minus job openings):
These are not seasonally adjusted so that’s why you get the inverted-U shape every year for the hiring and quits series and the inclined saw shape for firings. Still, you can see something happened the last two or three years. Firings (the pink line) spiked in early 2009 but several months before that quits (blue) and hirings (green) declined by about 20 to 30% each. Here’s a close-up of the most recent period:
A couple things that strike me about these graphs:
1. Firings had a one month spike in January 2009 (a month with a high number of firings to begin with) but the series has stayed about where it usually is (maybe 10% higher if you ignore the recent dip). The story of this recession isn’t of people losing their jobs.
2. Looking at the dramatic decrease in hirings, the story of the recession is that people aren’t finding new jobs.
3. However, because there’s much, much fewer people quitting their jobs the job market isn’t as tight as it could be.

One of the things I do in my dissertation is treat changing jobs as an investment decision. When a worker quits their old job and looks for a new one (maybe not in that order), they are forgoing human capital that made them productive at their old job and they’re investing in new human capital to make them productive in their new job. One possibility — given the JOLTS evidence and thinking of job switching as investment activity — is that like employers who are holding back on new invests (and thus holding back on hiring), workers are holding off on making new investments as well.

I’m not sure about the implications for aggregate demand, but I’m pretty sure this is bad for growth prospects.

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