Last week, we examined how half of the new jobs added in June were government jobs, according to the official data. It was the weakest month for private-sector jobs in nine months. We also saw that unemployment claims last month reached the highest levels since 2018 (ex covid).
There’s another indicator of how stagnant this job market is: the number of hires. In June, the number of hires fell, dropping by 70,000 year over year, and by 112,000, month-over-month. That’s the largest month-over-month drop in seven months.
Moreover, the larger trend in hires shows that hires, when adjusted to the working age population, are near a tend year low, excepting the covid period.
Specifically, the number of hires per 1,000 working age adults (aged 25-54) was 41.9 during June. That puts the hires level back about where it was during the summer of 2015. At 41.9 per thousand, hires are also below where they were during the 2001 recession and only slightly above where they were when the Great Recession began in late 2007.
Source: population data via OECD, hires via JOLTS report.
Many analysists who are bullish on the job market continue to point to the “job openings” metric in an attempt to claim that the job market is strong. When we look at actual hires, though, we see a different story and the word “stagnation” would be a better descriptor.
Looking at similar data, Courtenay Brown at Axios comes to some similar conclusions. She writes:
Americans live in separate economic realities: Those with a job are likely to stay employed, but those without one are likely to stay unemployed.
Why it matters: Welcome to the low-hire, low-fire labor market. Private-sector layoffs are at historic lows, but that masks a dreadful outlook for unemployed workers or those unhappy with their current positions.
Driving the news: The labor market surprised in June with a better-than-expected payroll gain of 147,000, the government said on Thursday.
But a whopping 85% of those job gains came in just two sectors, according to calculations by Mike Konczal, a former Biden economic official: education and health care.Hiring in other sectors — including professional and business services, a catch-all category for white collar jobs — was little changed, the government said.
The big picture: That continues the “frozen job market” trend that has plagued the economy in recent years.
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What they’re saying: “We’re in a complex jobs market —it’s not falling apart but the lack of dynamism, the lack of churn and the lack of hiring has been punctuated in the first half of the year,” says ADP chief economist Nela Richardson.
“Many employers are loath to lay off workers until they see the whites of the eyes of a recession, having had such problems finding suitable workers in the first place,” David Kelly, chief global strategist at J.P. Morgan Asset Management, wrote in a recent note.
The bottom line: If you look only at how many Americans are losing their jobs, this appears to be a pretty terrific labor market. If you look only at how many are being hired for new jobs, it is the weakest in years.
(Note how employment gains have been driven by two sectors that rely heavily on government subsidies: health care and education. This fits nicely with the continued evidence that government employment is a growing factor in job gains.)
This looks to be especially bad news for young workers who are trying to establish careers and acquire assets. Homes are the most unaffordable they’ve been in decades and overall monetary inflation greatly favors those who already own assets while punishing those who have been unlucky enough to have been born too late to cash in on buying real estate 16 or 17 years ago before the central bank began buying up trillions in assets in to inflate home prices.
