Fed-all eyes on job survey
2022.11.29 08:02
Fed-all eyes on job survey
Budrigannews.com – Katharine Abraham attempted to fill a gap in U.S. economic data when she was a graduate student at Harvard University in the 1980s by piecing together an estimate of labor demand, which was essentially a best guess of the number of open jobs in the country.
She drew from a smattering of data, including information from the manufacturing sector, a little from Canada, and surveys that some states had conducted.
In a recent interview, she stated that it was the best information available at the time.However, when she became the commissioner of the Bureau of Labor Statistics under the Clinton administration in the 1990s, she transformed that project into one of the most significant, if still somewhat obscure, collections of labor market data in addition to the monthly U.S. jobs report itself.
The Job Openings and Labor Market Turnover Survey (JOLTS), which was first made available to the public in 2002 and contains data that dates back to December 2000, is relatively recent in comparison to unemployment statistics that date back to the 1940s. The first time Abraham proposed it, budget cutters even tried to kill it.
The JOLTS job vacancy estimate, on the other hand, is having a moment, and its track record is long enough that Federal Reserve Chair Jerome Powell has made it a benchmark for how he views the labor market and, as a result, the possible course of interest rates.
Tim Duy, chief U.S. economist at SGH Macro Advisors, wrote in a note that when the survey for October is released on Wednesday, “all eyes will be on the job openings data” and whether an anticipated decline in openings reaffirms the Fed’s hope that the super tight hiring conditions seen throughout much of the COVID-19 pandemic are easing.
Estimates of the Fed’s anticipated path for interest rates could be shifted by a significant surprise in either direction.
Powell stated in a news conference following the conclusion of the central bank’s Nov. 1-2 policy meeting that the JOLTS vacancy estimate “has been so out of line” and “has been unusually important in this cycle because it has been so out of line.” There are roughly two jobs open for every person who is unemployed.We keep looking for indications that there is a beginning of a gradual softening, but I don’t think there is yet a real softening.”
When compared to the 21,000 businesses polled by the Labor Department for JOLTS, the monthly unemployment rate, which is the product of a much larger sample of approximately 60,000 people each month, still receives the majority of the headlines as the indicator of the state of the job market.
However, that is a vague and general statistic.In recent times, researchers have looked for data supplements, particularly JOLTS data, that can provide more nuance about the dynamics of the job market.
For instance, a worker who is laid off and quits their job may appear to be headed for unemployment.However, a rise in layoffs is a sign that the economy may be weakening, while a “quitter” is more likely to simply switch jobs.
Both are measured by JOLTS, and former Fed Chair Janet Yellen elevated the quits rate to crucial status in her job market monitoring while she was vice chair of the U.S. central bank. When they reached their peak during the pandemic, quits estimates would later serve as the basis for discussion about a “Great Resignation.”
Because of the prominence of the JOLTS data, the Biden administration wants to double the size of the survey and increase the budget from approximately $5.5 million to $9.6 million. This will allow estimates to be produced without the one-month lag that currently exists, provide more detail by industry and state, and fill in what they believe to be gaps that have existed for a long time.
With a one-page form that requests six pieces of data, the current survey was made to be simple for businesses and encourage responses.
According to Steven Davis, an economics professor at the University of Chicago Booth School of Business, one issue is that the job openings recorded by businesses do not reflect how intensely a company is attempting to fill its available jobs. As a result, it is unclear whether executives are primed to bid up wages or are passively waiting for the right candidate.
“At the point when Shocks went along it was venturing into an information void that it has worked really hard of filling. Davis said, “It’s just incomplete.”There is nothing about the employer’s effort missing, like how quickly you interview, how strict the standards are, or how easy they are. That’s not true at all.”
Paul R. Calhoun Jr., who is currently in charge of the JOLTS survey and was involved in its development in the 1990s, stated that an expanded survey may directly address that and other issues in the future.
According to him, one of the substantive gaps that could be filled is the pay for open jobs.
This data, when combined with occupational estimates that JOLTS economists also want to develop, could show how wages are expected to behave, which is another important point for the Fed to keep inflation under control.
Calhoun stated, “You have all these job openings.”How should I describe them?Are these jobs worthwhile?
Abraham stated that after her initial survey proposal was rejected, it was revived when President Bill Clinton’s White House wanted more information about the technology-driven boom of the mid-to-late 1990s and the unemployment rate fell below 4%.
“We knew how many people are looking for work but do not have a job because we had the unemployment rate. She stated, “We did not have anything analogous on the employer side.””People were very concerned about labor shortages and difficulty employers were having in filling jobs,” which is analogous to the current circumstance.
Staff members at JOLTS claimed that the program only held on for a few years at first.
“To get this off the ground for a few years and hopefully survive because that was certainly, from my standpoint, not a guarantee,” Mark Crankshaw, the JOLTS lead statistician who also helped build the program, stated that the priority among staff members at that time was to construct a straightforward survey.
However, “it has been rising.Presently … I pay attention to webcasts and individuals begin discussing Shocks … I didn’t anticipate it by any means,” he said.
