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A JOLTing Report

02/11/2015

We are so accustomed to economic data that contradicts other economic data that we become almost giddy when data does agree.  Last week’s Jobs Report was simply great, showing a million jobs created over the last three months, as well as discouraged workers streaming back into the workforce.  Yesterday’s JOLTS (Job Openings & Labor Turnover Survey) Report confirms the tightening of the labor force.

In 2009, there were 6.8 job-seekers for every job opening.  Today, there are only 1.9 job-seekers per opening.  There are now five million job openings — THE MOST IN FOURTEEN YEARS.  Because it takes both courage and confidence to quit a job, the number of quits is also watched closely, and the good news is that 2.7 million workers quit their jobs in December, up 10.4% over the previous year.

The only “bad” news is that the current unemployment rate of 5.7% is high relative to the number of job openings.  This suggests a higher level of structural unemployment, that which cannot be decreased by the improving economy, because the unemployed don’t have the right job skills or they live in the wrong part of the country.  Trying to drive down structural unemployment could be extremely inflationary.

At this point, there have been minimal wage gains among the working class.  I expect we will soon witness some significant wage gains for them.  At least, I hope so!  It is hard to argue that our economy is not doing well enough to pay increased wages.  It is a question of economic power, which is slowly shifting from management to labor.  CEOs would be wise to pacify their workers now, before those workers either quit their jobs for another or, even worse, remember the purpose of unions.

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