"Jobs" vs "Unemployment"
As a professional Job Trainer, I'll try to explain this so simply that even Jack Welch can understand.
The first thing to remember is that the Jobs report and the Employment/Unemployment report are 2 entirely different surveys. The Jobs report is the result of surveying Companies and saying "did you add any new jobs?". The Unemployment report is the result of calling households and saying "are you working?". A gross over-simplification, but close enough to get across the idea.
Simply because a company adds jobs doesn't mean they're filled. If a company adds a job but doesn't fill that job, then that doesn't affect the Unemployment figures at all. The figures I have been hearing over and over is that there are an estimated 3 million jobs that haven't been filled. From experience it can take a long time to fill a position after it's become available. Therefore, adding jobs doesn't affect Unemployment if those jobs aren't filled.
However, if previously unfilled positions are filled, then more people are working. So, there is a lag time between the time a job is created and it is filled and more people are put to work.
On the converse, if jobs are cut then those people are immediately "on the market" and looking for a new job, which immediately raises the unemployment figures.
Add to this the fact that I have also been hearing that companies are looking for specific skills but refusing to train employees. That's really not that unusual with high unemployment. Companies assume that with so many choices that there is "someone" out there with the skills that they need. They just need to find them. Again, this makes the process of filling that available job longer as the companies have to go through a longer process to find the "right person". When the available pool of candidates is reduced, then companies will reinstate job training. If they reinstated job training more quickly - even on the job training - we would see the Unemployment figures go down even quicker.
So, it's expected that during a recovery that the Unemployment figures will lag behind the Jobs Added figures, and that you can see a sudden drop in Unemployment without a correlating increase in Jobs.
Does that make sense? Again, they are 2 different surveys. A company may add a job, but not fill it. This makes the jobs figure go up but doesn't affect the Unemployment figures. More people may actually get a job that was created 6 months ago, which DOES affect the Unemployment numbers.
Questions?
