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The Job Finding Rate is Pushing Up Unemployment and That’s Bad for Society [1]

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Date: 2024-11-26  

The Job Openings and Labor Turnover Survey (JOLTS) program of the Bureau of Labor Statistics (BLS) shows that, for the year ending September 2024, found that while the number of job openings had barely changed compared to the month before, at 7.4 million, hires also barely changed, at 5.6 million. Layoffs were unchanged at 5.2 million. That sounds like a story of stability, but, in many ways, it points to why Donald Trump won the election. If the number of hires is not rising, future unemployment is likely to be higher. In fact, research shows that the hiring rate is responsible for three quarters of changes in unemployment. It is much more important to the unemployment rate than layoffs.

Source: U.S. Bureau of Labor Statistics

In fact, the Federal Reserve Bank of Minneapolis found that since the second half of 2022, the decline in the job-finding rate has been the most responsible for the rise in the unemployment rate. So, layoffs are low, the stubbornness of the hiring rate numbers show that firms are fearful, the number of open jobs is not really growing, and as more people enter the labor market, the unemployment rate will rise. As the number of people failing to find jobs rises, the unemployment rate rises, even when layoffs remain low.

Source: Federal Reserve

Put this into the context of the election and, even without mass layoffs, you can see why many Americans got to Election Day ready to gamble. There are no signs that the job-finding rate is set to increase markedly. Until businesses feel that hiring is worth it, that they can extract a profit out of each worker, they will not hire more people.

This presents us with a problem, both a policy problem and a messaging problem: we need to find ways to encourage businesses to hire more people, and yet, those people who are actually employed are often exploited by businesses, with unionization fought, as with Amazon and Tesla, wages suppressed, and in many instances, simple workplace safety measures slow walked. At a time when America is angry and wants change, threading the needle between fighting corporate greed while encouraging corporations to be more aggressive in hiring and growing their businesses, will be hard.

What we know from history, though, is threading the needle is possible: in the Franklin D. Roosevelt and Lyndon B. Johnson era, we had two presidents who went after Big Business for their greed, for monopolies and oligopolies, and for their political power, and yet, they managed to promote the welfare of the American worker, by promoting and backing unionization, investing in social welfare programs, and investing in infrastructure and other programs. If the Democratic Party is going to succeed in 2028 in re-taking the White House in 2028, we need to return to that holistic vision, aggressively defending workers’ rights while creating an economy where everyone can thrive.

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