|View From a Height
Commentary from the Mile High City
Monday, March 08, 2004
Business school students read the WSJ and Investors Business Daily with some regularity. IBD had a very good point last Friday about the jobs situation. The number of hours worked had been falling for two years, it's now up for the last two quarters, that last quarter up 1.4%. This, combined with slowing increases (still increasing, though) in worker productivity, indicate that there's less output to be gained from existing workers. That points to a slow tightening of the job market.
Now for the original thought. You've heard of the M1, the money supply. Dollars in circulation. There's also M2, often called the velocity of money. If M2 is a leading indicator of economic activity. When money starts moving faster, it means people and businesses are spending more of what cash they have. As long as that's not a result of inflation, that's a good thing.
I'd like to propose that there's a similar notion of the velocity of jobs. The unemployment rate is low, we're probably pretty close to full employment, but how easy is it for someone to find a new job? When the "velocity of jobs" picks up, when it's easier for people to find new work, then they start to feel more secure, and more optimistic. Full employment without options isn't satisfying. An unemployment rate of 6% but with lots of new openings provides hope. It's the possibility, or threat, of finding new work, that can allow workers to better their situations in the short term.
I can think offhand of a few ways of measuring the ease of finding work, but most of them are qualitative. A new survey of the number of people switching jobs. Some survey that measures the mean-time-to-success for job searches. The ratio of help wanted advertising to the size of the local job market. So far, I haven't actually been able to find accepted metrics, but it would surprise me if this hadn't been looked at.
Right now, we're still taking up the slack from an unsustainably low unemployment rate. People got used to an unsustainably high ease of finding new work. Psychologically, people's opinions about the job situation won't change until enough slack is gone that they can again find new work, to improve their situations, easily.
With the unemployment rate, it's a very high bar, I'm afraid.