Trying to explain employment trends in 2011 utilizing statistical models and metrics from the previous century can humble even the smartest economic minds. Todays New York Times, my favorite vehicle for explaining things in plain English, devotes an "Economix" article to the fact that trends in economic recovery are not matching up with traditional models.
Is something different about the employment world we all live in?
The gist of this story is the fact that the number of unemployed people per job opening should start trending down as the recovery takes hold. Unfortunately (if you believe numbers gathered by Bureau of Labor Statistics) the ratio of unemployed to job openings peaked at 6.3 in Q4 '10 and remains close to 4.7. Not a reflection of positive changes we hear about in the news.
What's the issue? Are we looking at the wrong numbers? Is the BLS using old methodology to try to gather new information? Last months crazy gap between the unemployment rate decrease and the low job creation figures was an obvious reminder that you can't compare two indicators when they come from two different survey targets: households (survey claimed over 600,000 new jobs were created) and businesses (who were responsible for the number used by our government in measuring job creation- only 36,000 last month).
My favorite part of this "Explaining the Science of Everyday Life" article comes at the end when VP of Economics for your run-of-the-mill international banking giant, Henry Mo, tries to explain why we're not seeing the trends we would expect to see when things start improving:
There are concerns that the widening gap may reflect rising structural unemployment due to skills mismatch, lower labor mobility resulting from the housing slump, and etc. Aside from these elements, we view the widening gap more of a result of employers’ reduced hiring intensity – employers seem to take advantage of the tough labor market and take time to fill the jobs that they advertised.
Or is it the fact that job creation is simply a different kind of function than it was in 1958? What does someone mean when they refer to "employers hiring intensity"? Or maybe, as Mr. Mo suggests, are employers sitting back, drinking Starbucks, throwing frisbees in parking lots, and waiting to make hiring decisions when they are forced into doing actual work?
The entire concept of "work" is changing now in real time. Traditional employment is morphing into "project work", independent consulting, "just-in-time" talent and a myriad of other new and still formulating models for business to get things designed, developed, produced and delivered. If you don't believe me, maybe you believe the VP for Economics from Credit Suisse. He says it's just an anomoly.
Right!
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