How The Economy Churns

I’ve been playing with the JOLTS data and I don’t have anything too too solid to report but I did want to reinforce some of my earlier points about how different the US economy as a whole is from the economy we have in our minds.

We usually think of a worker as a breadwinning head household in a career job. He or she has a steady life that may be rocked by recession. However, one of our most job heavy sectors is Leisure and Hospitality. Look at its basic dynamics

Its quite large at nearly 10% of all jobs. Its fast growing generally. Was one of the few sectors to show increased employment from when the recession ended and it recent months may be growing faster than at any time during the last recover.

In addition look how dominate it is in terms of overall job growth. Here are the12 month moving averages.

Currently the 12 month moving average of all job growth is around 150K, suggesting that nearly 1/5 net new jobs is Leisure and Hospitality.

Generally speaking this is a trend I would expect to continue as the End of Retail is combined with increasing income inequality. We should expect low skilled workers to become increasingly concentrated in direct service jobs like hot food and drinks.

Any one one of the points I wanted to make is that despite the huge job losses associated with the recession, there were not actually many layoffs or discharges in this sector. Here are the JOLTS data

If anything layoffs and discharges seemed to ease during the last downturn. I think what we are looking at is simply an incredibly dynamic sector of the economy in terms of workforce.

Rather than seeing a recession happen in terms of layoffs and sending people home. We simply see that job openings shut down.

This has potentially interesting consequences. If what we are seeing is that for some reason – maybe hardship, maybe life cycle – folks are passing through this sector, then when this sector shuts down on hiring its going to have some strange outside-insider implications.

We are not going to see lots of workers loosing their jobs, simply that the opportunity for new workers to gain jobs will collapse. This is somewhat different from how we commonly talk about job markets.

And, in general I think its important to point out that much of the US workforce is in areas that don’t have the office like dynamics that are common to folks who read and right blogs.

For example another sector where layoffs were not the norm but hiring collapsed was health care and education. That’s even larger in terms of employment.