Just as with any other commodity, when the market is over-saturated, it tends to bring the value down --- and the same can be said for labor market. And with high unemployment (11.7 million that the Department of Labor counts in the U-3 rate) and only 3.8 million job openings, this can only drive down wages, as the "demand" for labor is low (for either skilled or unskilled labor).
As per the Bureau of Labor Statistics' JOLT report (Job Openings and Labor Turnover Survey) - "A job opening requires that a specific position exists and that the employer is actively recruiting from outside the establishment to fill the position. Active recruiting means that the establishment is taking steps to fill a position by advertising in newspapers or on the Internet, posting help wanted signs, accepting applications, or using other similar methods."
But the National Bureau of Economic Research found that employer's efforts to fill job openings has been slack at best. Employers may be posting openings, but they are not trying all that hard to fill them, say, by increasing job ads or offering better pay packages.
According to the JOLT report, there are 3.8 million job openings and they include full time, part time, permanent, short term and seasonal job openings. The vast majority of job openings are in the private sector, and most are in the business, education and healthcare industries.
But there is also a massive turnover ("churn") in the current job market. It appears as if most people are being hired for temporary work, then being laid off, and then reapplying for other temporary jobs (and possibly, being laid off yet again after being rehired).
From the JOLT report: "Over the 12 months ending in April 2013, hires totaled 52.0 million and separations totaled 50.2 million, yielding a net employment gain of 1.8 million. These figures include workers who may have been hired and separated more than once during the year."
Note that Bureau of Labor Statistics says "may have been", but what other possible answer could there be? When one is separated from a job, it's either because of a involuntary layoff or discharge, a voluntary quit (such as for a retirement or for a mental/physical disability), a criminal incarceration, or by death.
And of the 52 million hires reported, excluded from the number were jobs that were filled by internal transfers, promotions, demotions or recalled from layoffs --- so we are looking at 52 million "new" hires during a period of one year (From April 2012 to April 2013).
Although, many of those jobs may also be attributed to temporary help in the fast-food industry during the summer months, and in the retail industry during the fall and winter holiday season, and for financial services in the Spring for tax preparation, and during a U.S. Census count every 10 years.
And as for the 3.8 jobs openings for 11.7 million unemployed, "a lack of skills" is not the reason for not filling these jobs. Both academic research and a closer look at the numbers in the JOLT report show that unemployment has little to do with the quality of the applicant pool.
The editorial board of the New York Times writes, "There is a durable belief that much of today’s unemployment is rooted in a skills gap, in which good jobs go unfilled for lack of qualified applicants. This is mostly a corporate fiction, based in part on self-interest and a misreading of government data."
As noted in the JOLT report, most job hires were in the professional and business services industry. Bruce Barlett at the New York Times recently wrote an interesting piece about this called Financialization as a Cause of Economic Malaise:
|The financial sector leeches growth from other sectors by attracting a rising share of the nation’s “best and brightest” workers, depriving other sectors like manufacturing of their skills. The rising share of income going to financial assets also contributes to labor’s falling share. The falling labor share results from various factors, including globalization, technology and institutional factors like declining unionization.
But according to a new report from the International Labor Organization, "financialization" is by far the largest contributor. The report estimates that 46 percent of labor’s falling share resulted from financialization, 19 percent from globalization, 10 percent from technological change and 25 percent from institutional factors. This phenomenon is a major cause of rising income inequality, which itself is an important reason for inadequate growth.
As the [multi-millionaire private equity investor] entrepreneur Nick Hanauer pointed out at a Senate Banking, Housing and Urban Affairs Committee hearing on June 6, the income of the middle class is critical to economic growth because of its buying power. Mr. Hanauer believes consumption is really what drives growth; business people like him invest and create jobs to take advantage of middle-class demands for goods and services, which must be supported by good-paying jobs and rising incomes.
Nick Hanauer gave a very interesting speech at TED University (text and video here) where he says, "Rich people don't create jobs, nor do businesses, large or small...only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary consumer is more of a job creator than a capitalist like me. Somebody like me makes hundreds or thousands as times much as the median American, but I don't buy hundreds or thousands of times as much stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and shirts a year like most American men. Occasionally we go out to eat with friends."
There's another video of Nick Hanauer posted at YouTube with over 76,000 hits so far. In an interview on Fox News, when he's not being interrupted by Neil Cavuto, he makes some very good points.
But almost everyone agrees, both liberals and conservatives alike, that the lack of manufacturing is the root cause for high unemployment in the U.S. --- and high unemployment, in conjunction with anti-union activities (propagated by state legislation such as "right-to-work" laws), H-1B visas and other guestworker programs, and the offshoring of jobs is also driving very low wages.
Robert Mundell, a Nobel Economics Laureate, and one of the chief architects of Reaganomics and a lifelong advocate of trade liberalization, now believes outsourcing has gone too far. "It has been a mistake to let U.S. manufacturing run down so low. While other nations have industrial policies to maximize their trade benefits, the United States leaves itself open like a naked woman.”