Saturday, June 23, 2012

Job Openings and Labor Turnover Survey (JOLTS)

*graph above from Stone and McCarthy Research Associates

The Job Openings and Labor Turnover Survey (JOLTS) published 06/19/2012 for month ended  April, 2012 by the Bureau of Labor Statistics (BLS) was an abysmal report. The complete report can be found at the link below:


On page five of the JOLTS (see link above) you will see a graph of The Beveridge Curve which plots job openings vs. unemployment. The Beveridge Curve is not exactly a mainstream concept unless you spend a lot of time in the area of manpower economics. In a nutshell an economic contraction on The Beveridge Curve is indicated by high unemployment and low vacancies. High [job openings] vacancies and low unemployment rates indicate an economic expansion. Hence The Beveridge curve plotted on page five is indicating an economic contraction.


The Beveridge Curve can shift inward and outward. If the curve moves outwards then X level of vacancies is associated with increasing levels of unemployment. The shift outward supposedly depicts a decreasing efficiency in labor markets. The implied inefficient in labor markets are supposedly caused by mismatches between available job openings and the pool of unemployed and also associated with an immobile labor force.


Hence we have a Beveridge Curve that is plotting in the economic contraction area and is shifting outward. That is, the Beverage Curve is stating few job opening exist and of those job openings, no match exists over time.

Further, the Beverage Curve has been plotting very erratically. Or as Tyler Durden at Zero Hedge depicts it in a recent blog post: “As Job Openings Plunge By Most Since May 2010, Beveridge Curve Goes Berserk”. (1) As Durden aptly points out, the mismatched job opening are not only mismatched, they are being withdrawn as “vacancies” plunge.

Hence the Beveridge Curve is indicating an economic contraction cycle and has indicated so for some time. Further, one reason the unemployed remain unemployed is that there are few job openings. Of those few job openings the match of vacancy to applicant is low. With job openings plunging the situation becomes worse for the unemployed.


(1)  As Job Openings Plunge By Most Since May 2010, Beveridge Curve Goes Berserk, Tyler Durden, Zero Hedge, 06/19/2012.




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