Republicans’ “Jobs Gap” is a misleading measure that means nothing

Jared Bernstein

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

The Republicans’ “Jobs Gap” is a meaningless measure that reveals nothing about the job market. It can, and is, easily manipulated to show any outcome you like.

On the other hand, the facts about the current labor market are as follows.

–The long-term trend of job growth remains solid, unemployment is low, and, contrary to claims related to the “jobs gap,” employment among working-age people is growing relative to their population.

–Anecdotes suggest that some particularly hot labor markets are helping workers overcome steep labor market barriers, like criminal records. Conversely, some groups of workers face skill or health deficits, the absence of necessary work supports, or live in places that have not yet been reached by strong labor demand.

–Even as the job market continues to tighten, wage growth has been relatively sluggish. Since late 2016, real earnings for middle-wage workers has been flat.

The phony jobs gap measure 

The Republicans “Jobs Gap” measure consists of two disparate series—the labor force participation rate (LFPR) and job openings—with very different scales and no substantive meaning. The commentary around the measure suggests its advocates think the jobs gap shows that people are not taking advantage of labor market opportunities, but the actual data belie that claim.

The LFPR is the percentage of the 16+ population that’s employed or unemployed (i.e., in the labor force), and job openings are millions of jobs. Importantly, the 16+ population includes persons of retirement age, an increasing share of the U.S. population, as well as teenagers in high school and young adults in college, so it is not a useful measure for the purpose it is intended (I show better measures below). Labor economists have long expected the overall LFPR to grow less quickly as the baby boomers age out of the labor force.

But the immediate problem with the “jobs gap” is that there’s no meaningful way to present these two series on one graph. In fact, by tweaking their different scales in ways that make no more or less sense than the Republicans’ version, you can get a gap of any size you like or no gap at all!

Here’s the Republicans’ version.

Here’s one with a much bigger gap. Oh no!

 

Here’s one with a negative jobs gap (LFPR appears greater than job openings)! Phew!

 

What do the job openings data show?

A more serious attempt to learn about the current labor market from the jobs opening data might make use of two figures that the BLS publishes every month when the openings data are released (new data came out this AM). Both show a tightening labor market with people filling available jobs in the way we’d expect at this point in the business cycle.

The first figure shows the unemployed per job opening. During the recession, there were almost 7 unemployed persons per job opening. Now, there’s only 1, and the measure is actually a bit below its pre-recession level.

 

The next figure shows job openings and hires as rates (shares of total employment). They’ve both been on the rise as the job market has improved and are at similar levels now. Again, there’s nothing in these data that show people not taking advantage of job opportunities.

 

In fact, for prime-age (25-54) workers, employment rates have been rising at a solid clip.

As noted, due to our aging population, the total LFPR can be misleading when evaluating the job market. In fact, the increased share of older persons in the LFPR is one reason for the recent flat trend in the LFPR in the jobs gap figures above, which is why many labor market analysts prefer to look at the prime-age population, age 25-54, as this excludes persons aging out of the labor force.

The simplest way to discern if working-age people are taking advantage of job opportunities is simply to look at their employment rates (the share of the working-age population with jobs). The next two figures look at the employment rates for men and women in this 25-54 age range. In a trend that clearly contradicts conservative stories about prime-age workers unresponsive to opportunities, both series have climbed steadily in the expansion and both are closing in on their pre-recession peaks.

 

Some anecdotal accounts reveal that in some parts of the country, the tight labor market is providing opportunities for people who in less hot job markets face steep barriers to entry into the job market. From the NY Times:

“A rapidly tightening labor market is forcing companies across the country to consider workers they once would have turned away. That is providing opportunities to people who have long faced barriers to employment, such as criminal records, disabilities or prolonged bouts of joblessness.”

In sum, the labor market is on a long-term, tightening trend, and working-age people are increasingly employed. Unemployment per job opening is low, hires and openings rates are up, and employment rates for prime-age workers are steadily climbing back to pre-recession levels.

Are there any downsides to the current job market?

One significant shortcoming in the current labor market is that national wage growth has disappointed, especially for middle-wage workers, both in nominal and real terms. As I show in this recent analysis, wages have typically grown faster at current levels of unemployment, and in real terms, middle-class worker pay is not up at all since 2016.

 

It is also the case that even at low unemployment, regional pockets of above-average joblessness still exist. Recent research published by the Brookings Institution, for example, shows that potential workers in some places remain unreached by low unemployment, emphasizing, for example, the gaps between employment rates for prime-aged workers in the hot coastal markets versus places hurt by manufacturing job losses. Moreover, as is far too often the case, minority jobless rates remain well above those of whites, even controlling for education.

Congress could therefore do more to address the structural barriers that even at low unemployment stand between too many Americans and the job market. These barriers occur on both the demand side (too few job opportunities) and the supply side (skill or health deficits, discrimination, criminal records) of the labor market. Workers whose skills don’t align with today’s employers’ demands will need robust training and apprenticeship programs. Others will require work supports including higher minimum wages, housing and nutritional support, and, in some places, direct job creation programs.

Two new papers from CBPP provide excellent guidance in terms of what sort of interventions have been found to be most effective in helping left-behind workers overcome this spate of labor market barriers.

It should be noted that because they fail to address these structural barriers, adding work requirements to anti-poverty programs will backfire. And yet, instead of investing in jobs, training, and work supports, the Congressional majority passed a regressive, deficit-financed tax cut that adds almost $2 trillion to the 10-year budget deficit. If we truly hope to help workers left behind, these resources are sorely misdirected.

Note: All data are from the BLS. Thanks to Somin Park for lots of great help.

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow.  From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author and co-author of numerous books, including “Crunch: Why Do I Feel So Squeezed?” and nine editions of “The State of Working America.”

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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