The unemployment rate is low, but it’s a tough time to find a job. I know, that sounds contradictory, but I can show that it’s true. And it’s not great for Vice President Kamala Harris, who is trying to chip away at many voters’ faulty perception that she and her boss haven’t been as good on the economy as former President Donald Trump was.
First, the good news. The Bureau of Labor Statistics announced Friday that the unemployment rate fell a tenth of a percentage point to 4.1 percent in September, which was unexpectedly low — in the bottom sixth of all monthly jobless rates going back to 1990.
There was also a bigger-than-expected increase in the number of payroll jobs in September, up 254,000. That was likewise a sign of strength (although there’s a good chance we’ll see the number revised lower, as I’ll explain).
Why, then, would it be hard to find a job? Because it’s not heavy hiring that’s keeping the unemployment rate down. It’s been more a lack of firing. So if you have a job, you’re feeling good. If you’re looking, not so much.
According to Friday’s report, there were 2.01 million people who went from unemployed to employed between August and September. But there were more — 3.45 million — who went from unemployed to (still) unemployed.
Three days before issuing the jobs report for September, the bureau put out the Job Openings and Labor Turnover Survey (JOLTS) for August. True, it’s older data, but it has a wealth of detail that’s missing from the main employment report.
According to JOLTS, the national hiring rate fell to 3.3 percent in August, which except for the pandemic month of April 2020 was tied for the lowest level since March 2013. To put that slow pace of hiring in perspective, the unemployment rate in March 2013 — the last time hiring was slower — was a recession-like 7.5 percent.
The layoff rate, as I said, has been low. It was just 1 percent in August, tied for the lowest since the spring of 2022, when employers were struggling to rebuild their staffs after the “great resignation” of Covid. That’s good for incumbent workers.
But people aren’t quitting, which indicates that they are pessimistic about their chances of getting another job if they lose the one they’re in. The quit rate of 1.9 percent in August was the lowest — except for the Covid resignation period — since December 2014.
Survey data back up what the government figures show. The Conference Board asks people every month whether jobs are plentiful or hard to get. The “plentiful” index fell in September for the seventh straight month, while the “hard to get” index rose to its highest level since February 2021.
As for that strong reported growth in payrolls in September: It does somewhat undercut the notion that employers are just sitting tight with the employees they already have. But the response rate to the government survey has fallen, making it less reliable. “We think that small businesses are disproportionately late responders and are cutting back on hiring more than large businesses,” Samuel Tombs, the chief U.S. economist of Pantheon Macroeconomics, wrote Friday in a note to clients. “We are convinced, therefore, that September’s print will be revised much lower over the coming months.”
The problem with the seemingly strong September jobs report is that “none of this tallies with any of the other data,” including the Federal Reserve’s Beige Book, an analysis of business conditions based on reports from the 12 Federal Reserve districts, James Knightley, the chief international economist for ING, a Dutch bank, wrote Friday. So for right now, I’m not fully persuaded by this “A+” (Merrill Lynch) or “dinger” (JPMorgan Chase) jobs report.
To complicate matters, I have a different view of the longer term. I think the bigger problem over the next several years will be shortages of workers. You can even see that in the JOLTS data from August: There were eight million job openings on the last business day of August, which is historically high, albeit down by 1.3 million from a year earlier. The reason openings are so high is that many of the people who need work don’t qualify for the jobs that are available. That’s not good for either employers or job seekers.
Baby boomers are retiring en masse, Ron Hetrick, a former Bureau of Labor Statistics employee who is now a senior economist at Lightcast, a labor market analysis company, told me. Parts of the financial sector are cutting jobs, but unemployment there isn’t rising, which indicates that there are few people to spare, he said. As for artificial intelligence, he said it won’t start taking a meaningful number of jobs for some time to come.
I’ve seen the polls showing that Harris is narrowing the perception gap with Trump on economic competency. I find those encouraging, and I think Harris would do vastly better than Trump on economic matters. But she has to be careful about trumpeting that 4.1 percent jobless rate. Because it doesn’t match how people are feeling about the labor market.
Elsewhere: Wisconsin Has Cheese … and Fusion
Southern Wisconsin has become “an unusual hub for private fusion research on the international stage,” according to an article on Wednesday in The Capital Times, a weekly newspaper in Madison, Wis. Three companies there aim to produce electricity through nuclear fusion, the process by which the sun generates energy.
Realta Fusion is based in Madison, the state capital. Shine Technologies is based in Janesville. Type One Energy, based in Oak Ridge, Tenn., has an operation in Madison. All three are spinoffs from the University of Wisconsin’s Fusion Technology Institute, which claims to have “the largest program in the United States for advanced degrees in fusion engineering.”
Quote of the Day
“Philanthropists have resources that governments need for innovation, and governments have powers that philanthropists need for solving problems.”
— Michael Bloomberg, “Bloomberg by Bloomberg,” revised edition (2019)
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