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Openings vs Unemployment Level

• Job Openings: 7.18 million
• Unemployment Level: 7.24 million

The trends in openings and unemployment are not good. Yet, Fed Chair Jerome Powell cites a strong labor market.

Job Openings, Hires, Separations, Quits

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The Job Openings and Labor Turnover Summary (JOLTS) report from the BLS shows the labor market continues to weaken.

Job Openings

• The number and rate of job openings were 7.2 million and 4.3 percent, respectively, in July.
• The number of job openings decreased in health care and social assistance (-181,000); arts, entertainment, and recreation (-62,000); and mining and logging (-13,000).

Hires

• In July, the number and rate of hires were unchanged at 5.3 million and 3.3 percent, respectively.
• The number of hires increased in other services (+86,000).

Separations

Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations include separations due to retirement, death, disability, and transfers to other locations of the same firm.

• In July, the number and rate of total separations were unchanged at 5.3 million and 3.3 percent, respectively. Total separations were little changed in all industries.
• In July, the number and rate of quits were unchanged at 3.2 million and 2.0 percent, respectively.
• The number of quits increased in professional and business services (+197,000). Quits decreased in construction (-80,000) and in transportation, warehousing, and utilities (-49,000).
• Layoffs and discharges decreased in professional and business services (-130,000) but increased in federal government (+5,000). The number of other separations decreased to 272,000 (-63,000) in July.

Revisions

• The number of job openings for June was revised down by 80,000 to 7.4 million, the number of hires was revised up by 63,000 to 5.3 million, and the number of total separations was revised up by 281,000 to 5.3 million.
• Within separations, the number of quits was revised up by 67,000 to 3.2 million, and the number of layoffs and discharges was revised up by 192,000 to 1.8 million.

Job Openings Per Unemployed Person

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The ratio of openings per unemployed person dipped below 1.0 for the first time since April of 2021 at 0.96.

I believe openings are overstated and unemployment understated.

The survey response rate for JOLTS is about 34 percent

Response Rates and Survival Bias Issues

• First, firms that go out of business don’t respond. This is known as survival bias.
• Second, larger businesses are more likely to have someone who routinely answers such questions.
• Third, businesses of all sizes are deciding they have better things to do than answer BLS surveys.
• Fourth, businesses that are doing well are more likely to spend the time than businesses that are struggling or understaffed

The unemployment level is suspect too. Response rates are low, and given deportation concerns, who wants to answer the phone or respond to surveys?

The trends are accurate but the numbers are highly suspect.

Major BLS Errors

Every month, economists and the Fed rely on poor BLS monthly data to make decisions despite major modeling errors, data collection errors, and survival bias issues by the BLS.

The lagging QCEW and BEDS quarterly reports highlight the flaws.

QCEW Report Shows Overstatement of Jobs by the BLS is Increasing

On June 16, I noted QCEW Report Shows Overstatement of Jobs by the BLS is Increasing

The discrepancy between QCEW and the BLS jobs report is rising.

The QCEW consists of 12.2 million establishments in the first quarter of 2024. The BLS nonfarm payroll report has a sample size of 629,000 individual worksites in 2024.

The nonfarm payroll response rate is 42.6 percent with the same issues as with JOLTS.

Tomorrow, ADP reports August data, and on Friday the BLS reports nonfarm payrolls and unemployent.

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