The signs are getting clearer that more labor disruption—colloquially known as millions losing existing jobs, new opportunities, income, and safety—are likely on their way.
“Employment rose less than expected in March according to ADP’s estimate of private payrolls,” said Bill Adams, chief economist for Comerica
CMA
Bank, in an emailed statement. “The ADP report, like yesterday’s report of a big drop in job openings, supports the Fed holding interest rates unchanged at their next decision in May.”
The report yesterday in job openings was the ongoing jagged declination that began after the historical peak in April 2022, as the graph below, from the Federal Reserve Bank of St. Louis using data from the U.S. Bureau of Labor Statistics (BLS), shows.
Understanding the jobs data has become confusing over the years and knowing what it actually means has become exceedingly difficult. For example, why had the number of open jobs grown so much? The obvious answer: there weren’t enough people to fill them based on the number of unemployed people available per job opening. The ratio has generally plummeted over the years, with a fraction of a person available for each job, or the opposite view of more jobs per person open. Here’s another graph of BLS data via the St. Louis Fed, this time showing people per job:
Have we seen a huge plummet in the number of people working? Quite the opposite. The civilian labor force level has kept growing over the years and it is at historical highs.
With that question comes an inquiry into whether the participation of particular groups of the labor force is off. That doesn’t seem to be the case in the 25-to-54 age bracket”
There are four demographic slices that show impact. People 55 and older—which understandably works at a much lower level than overall because of retirement, inability, and other reasons, have still seen an unrecovered slowdown of labor participation since the pandemic:
Another is labor force participation of women, who hit a peak of 60.3% participation in April 2000, began to see a long and slow decline to 2015, saw some rebound to February 2020, took a sharp hit during the pandemic, and haven’t completely recovered yet, running now at 57.2%.
Around 1990, those 16-to-19 years began a long slide until early 2012. That’s been slowing improving and even with the pandemic the participation rate has regained and is currently 37.5%.
And then there is labor force participation of men, which has been sliding since at least the 1950s, down from 87.4% down to the current 68%.
Why are some significant groups seeing such declines in labor force participation? Are all these new jobs that were created in high tech, biotech, finance, and other areas ones that require significant expertise? As much as that is an appealing explanation, it seems off track. How many restaurants, stores, construction companies, and others have cut back on their hours, offerings, or availability for the self-reported reason that they can’t hire enough people?
The percentage of younger people who used to work, maybe it was part-time jobs, has dropped. Fewer are working. One reason is probably that employers of what were entry-level jobs into industries, once the proving grounds of teenagers, have shifted to hiring “grown-ups” for various reasons, but at depressed economic rates leaving them less able to meet financial obligations.
The gender explanation is likely a balancing of opportunity for women and men, but then why did the male participation rate keep declining even as female leveled off? Are many giving up?
As for falling job openings, did companies finally hire to fill them? Are they giving up? Are they closing?
All this is concerning, the country has some significant ongoing social and economic imbalances, and there doesn’t seem to be enough data to grasp what is going on. And yet, questions about work are some of the biggest facing the country.
Nevertheless, whether there are enough people for jobs or not, whether inflation is slowing or not, it seems that worried companies will cut back on jobs. According to the Conference Board, the biggest areas of loss are likely to be in construction, transportation and warehousing—and IT. Those good jobs needing training and experience that were supposed to provide a new future for many.
More people will lose jobs and there will be more personal distress, even as corporations continue to rack up historically high profits while their tax payments in total remain pretty even.
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