By Catherine Hollander | July 5, 2012 | 12:00 p.m.
Bad news, job seekers–the economic recovery is probably occurring even more slowly than you thought.
The Labor Department will release its latest jobs report on Friday. Economists expect the unemployment rate to remain at 8.2 percent, the same as the previous month but nearly 2 percentage points lower than the recession-era peak reached in October 2009.
That’s a frustratingly slow decline, especially if you’re out of work. But when you compare it to the rate at which three other important indicators of labor-market health are improving–job openings, hires, and quits–it’s downright swift. A look at the latter paints a dismal picture for job seekers and the employed alike and isn’t showing signs of a big turnaround any time soon.
The data come from a separate monthly report from the Bureau of Labor Statistics known as the Job Openings and Labor Turnover survey. The JOLT data, which lag the release of the employment report by nearly two months, are collected from some 16,000 businesses and measure something known as “churn,” or hires and separations in the labor market. Churn has important implications for workers and the recovery, and the current rate is much lower than it would be in a healthy economy.
The pace of churn is tied to the unemployment rate–which, in turn, is tied to business and employer confidence–and generally moves in the same direction as the headline rate. But while both have shown slow, steady improvement over the past three years, churn has risen much more slowly, as the above graph indicates. That glacial pace of improvement provides a more accurate snapshot of the recovery.
“The unemployment rate is overstating improvements right now because so many people are dropping out” of the labor force, said Heidi Shierholz, an economist at the liberal Economic Policy Institute.
The difference is in the denominators. Unemployment is measured by dividing the number of people out of work by the number working and seeking work, also known as the labor force. When people give up looking for work, they drop out of the labor force, shrinking the denominator and bringing down the unemployment rate more rapidly than it would decline through job creation alone.