America remains on track to eliminate remaining pandemic unemployment within two years. And in the meantime, the churning of workers into new, different jobs could leave the economy more productive than before
On the surface, the American jobs market does appear to be behaving oddly. The economy is unquestionably booming. Real output rose at an annualised pace of 6.4% in the first quarter of 2021 and is projected to have grown at an annualised clip of nearly 10% in the second. Firms are keen to hire. The 9.3m job openings posted in April were easily the most on record. Employers—some, at least—are attempting to lure workers with generous pay.
Look closely, though, and the picture becomes both less mysterious and more complicated. Last year’s rapid rebound reflected the unique nature of the pandemic recession. Employers shed a staggering 22m jobs in March and April 2020, but about 80% of the unemployed at that time were temporarily laid off, with a job to which they expected to be recalled once lockdowns eased.
This shift in the composition of unemployment probably means that joblessness cannot fall as quickly as it did last year. The rise in unemployment in a recession is often much more rapid than the speed with which it goes on to fall during the recovery. This asymmetry stems in part from the fact that the creation of a new job involves time-consuming matchmaking, as worker and firm try to find each other. Congestion among the unemployed can slow this process.
Though tepid headline jobs figures seem a cause for worry, there is plenty of healthy churn taking place behind the scenes, as another survey indicates. Over the first five months of 2021 an average of 2.4m workers have moved from unemployment to employment each month. Joblessness has not fallen by more over this period only because some workers have moved in the other direction, while others are newly classified as unemployed after rejoining the labour force.
A prolonged period of elevated involuntary unemployment undoubtedly carries risks. But sub-million monthly payroll reports are not for the moment cause for much worry. , and better equipped for a post-pandemic world.This article appeared in the Finance & economics section of the print edition under the headline "Finding the perfect match"
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