It’s good news that jobless claims have dropped from record highs to less disturbing numbers. The reporter below states “signaling firings are easing as employers gain confidence in the economic recovery.” What proof does this Bloomberg reporter have that employers are gaining confidence in the economic recovery? Simply because they are not cutting as many jobs doesn’t mean they are hiring, and hiring is the sign that employers are gaining confidence. Let’s take a look at how things really look.
Dec. 24 (Bloomberg) — The number of Americans filing claims for unemployment benefits last week declined to the lowest level since September 2008, signaling firings are easing as employers gain confidence in the economic recovery.
The report showed the four-week moving average of initial claims, a less volatile measure, declined to 465,250 last week from 468,000. The average is the lowest since the week ended Sept. 20, 2008.
Let’s look at some additional points fo view and if those employers are actually gaining confidence or are they merely less eager to cut jobs, since they have already cut jobs to the bone.
As the 4-week moving average graph from Calculated Risk shows, there is ongoing improvement in the jobless claims figures, but jobless claims would need to level out below 400,000 per week to indicate that there is job growth.
Although falling, the level of the 4 week average is still high, suggesting continuing job losses.
Here’s some good news:
There may be some light at the end of the unemployment tunnel for some as the following NY Times article Labor Data Show Surge in Hiring of Temp Workers indicates:
Last month 52,000 temps were added, greater than the number of new workers in any other category. Not even health care and government, stalwarts through the long recession, did better….
Halfway across the country, in Burlington, Iowa, the recession bypassed the Winegard Company. That is perhaps because Winegard makes television antennas and satellite receivers, and in hard times people watch more television, said Denise Baker, Winegard’s director of human resources. Whatever the case, to keep up with new orders, the company has added 70 workers in the last two years — all of them temps.
“An actual employee with benefits costs more than a temp or a contract worker,” Ms. Baker said, “and as long as I can still get highly skilled temps, I’ll go that route. It gives me more room to reverse course if the economy weakens again and sales do finally sink.”
While temporary work can be beneficial to paying the bills, the uncertainty of any long term commitment will limit spending, which limits job growth in other areas, such as manufacturing. Other downsides include smaller or nonexistent benefits and poorer treatment by supervisors who look at temps as expendable.
Now lets look at the available jobs:
In October, according to the BLS, there were only 1.9 million job openings for 11,970,000 looking for work. I’m not sure why the figure is 11,970,000, since there are 15 million unemployed, but that what the government stats indicate. If you use 15 million unemployed as the number of people looking for work the picture is even bleaker with 7.9 job seekers per available job opening.
Although jobless claims are improving, the jobs picture continues to deteriorate since it takes longer to find the few jobs that are offered:
Americans enduring long-term unemployment have a cold comfort: In the 48 years that the government has tracked joblessness, there has never been a higher percentage of people out of work, and actively looking, for more than half a year.
In November, even as the national unemployment rate dropped from 10.2 to 10 percent, the ranks of jobless who had been looking for 27 weeks or longer jumped to 38 percent.
So why is it taking so long to find a job, well one reason is that there are fewer jobs in the pipeline:
Nationally there are about 6.3 unemployed workers competing, on average, for each job opening, a Labor Department report shows. That’s the most since the department began tracking job openings nine years ago, and up from only 1.7 workers when the recession began in December 2007: via Job competition toughest since recession began – USATODAY
According to the Unemployed per Job Posting at Indeed.com, job openings are certainly better in federal job areas such as Baltimore and D.C., but the job story is difficult in many areas, especially those areas that experienced housing bubble conditions. As the list shows, there are dramatic differences in available job postings per unemployed worker:
There needs to be more hiring improvement before it’s time to say “employers gain confidence in the economic recovery.” Let’s hope that 2010 brings those jobs to the millions who want them.