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November 8, 2011, 12:22 PM

More Churn in Job Market Is Hopeful SignEdit

Dollars to doughnuts.Edit

The number of people leaving or receiving jobs picked up in September, the Labor Department reported Tuesday, a sign that that the labor market may be regaining its health.

Both hires and separations have been relatively stagnant in the last year, with companies too nervous to hire or let anyone go, and employees too frightened to leave their jobs. Layoffs in particular had reached record lows earlier this year. But levels of both rose in September.

While a rise in separations, at least, may not sound like welcome news, it means that companies and workers are finally more willing to start making decisions again. Uncertainty about the state of the economy had largely frozen both hiring and firing, and without people leaving their jobs, companies had nobody to replace with new workers. Greater churn in the job market now potentially means more opportunities down the line for the 14 million unemployed workers sitting on the sidelines.

The turnover is still not as great as it was before the recession began, however, when the population was also smaller.

Particularly promising is that the number of quits — that is, workers who voluntarily left their jobs, as opposed to being fired or laid off — rose in September, reaching its highest total since November 2008. That probably means that workers finally feel more confident that they can find new work if they are unhappy with their current position.


Source: Bureau of Labor Statistics, via Haver Analytics

The best news was in job openings, which was at its highest level since August 2008, the month before Lehman Brothers failed. That also helped bring down the number of jobless workers per opening to 4.1, which, while still historically high, is far better than its peak of 6.9 unemployed workers per opening in July 2009.


Source: Bureau of Labor Statistics, via Haver Analytics

Continued competition among unemployed workers implies that wage inflation is unlikely to hit anytime soon, according to Henry Mo, vice president of economics at Credit Suisse.

The main continued area of concern in the Labor Department’s report was the disconnect between job openings and hiring. There has been decent growth in the number of job openings since the recovery officially began, with openings up 38 percent since June 2009, but growth in the number of hiring has been very slow, up only 17 percent.


Source: Bureau of Labor Statistics, via Haver Analytics

It’s not clear what to make of this. The disconnect could be due to a skills mismatch — that is, workers don’t have the skills that employers are looking for. Or it could just be a sign of continued hesitation among employers, who are waiting for the recovery to pick up more speed before they commit to fill the position.

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