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Larry Kudlow Is Wrong – Businesses Do Want To Hire
With the disappointing jobs report released earlier today, there is no doubt that my prediction for a far more positive report than most expected was off the mark. According to the Department of Labor numbers, job growth in July was positive but anemic, and far below consensus estimates. Following the weak BLS report, politicians, economists, forecasters, and the media are and will continue to passionately debate about the current state of the nation’s economy, the health of the U.S. job market, the effectiveness of what has been done already, and what should be done moving forward to improve conditions. Given both the plethora of conflicting data points and the insane complexity involved in assessing economic conditions in this kind of environment, it’s virtually impossible for anyone to have a perfect sense of where we are today and maintain absolute conviction behind their viewpoints. Having said that, I’d like to offer a few additional thoughts into the debate….
1) There is absolutely no arguing the fact that the 22,000 companies indexed in LinkUp’s job search engine added 119,000 new job openings to their corporate career websites in July. We meticulously track new listings with very, very sophisticated indexing technology, we update the index every day, and we do not index or aggregate jobs from other job boards. Therefore, the data is more accurate because these jobs are not advertised jobs in the traditional sense that the companies purchased advertising media to ‘advertise’ these jobs. These job openings are published freely on employers’ own corporate websites and include essentially every job opening in the company, in every industry throughout the entire economy, and in every geographic region of the country. Furthermore, because we only index jobs from a single source – the employer’s website itself – there are absolutely no duplicate job listings or garbage listings (scams, work-at-home, phishing, etc.). We do not have a lot of government sites in the index (yet), so the vast majority of the 22,000 employers indexed by LinkUp are private-sector companies representing essentially the largest employers in the country. These companies added 119,000 new jobs to their company websites in July, by far the largest monthly increase we’ve seen since 2008. So despite Larry Kudlow’s claims on CNBC this morning that companies simply do not want to hire, companies DO want to hire. They DO want to add employees. They are seeing or at least anticipate growth in their businesses and they WANT to add to their payrolls to handle the growing demand for their products and services.
2) While not every job opening posted on a corporate career website will eventually lead to a new hire, growth in new job openings, especially as large an increase as a 21% monthly jump, provides a strong indication that the job market is or eventually will be healthier than it is today. The question is how fast the growth in job openings posted to corporate websites will translate into actual job growth as reported by the Department of Labor. We are doing some internal analysis of this at LinkUp, and I will publish our findings over the next 30-60 days as those findings become available.
3) The disconnect between LinkUp’s strong June and July job openings numbers and the lackluster BLS numbers this summer could be explained by multiple factors. The first is that there is most definitely a lag between job openings posted on company websites and the addition of a new employee filling that position (see point 2 above).
The second possibility was raised this morning on CNBC by Jim Paulsen, Chief Investment Strategist at Wells Capital Management when he wondered if the repeated extension of unemployment benefits is creating a disincentive for people to return to work. To Jim’s credit, he clearly stated that the vast majority of unemployed are out of work because they legitimately cannot find a job despite concerted effort and strong desire. But at the margin, unemployment benefits may be lessening the urgency for some to return to work, and our data is potentially corroborating evidence of this phenomena.
Finally, and perhaps the most troubling, is the growing disconnect or mismatch between the job openings that are increasingly appearing on company websites and the qualifications of the people applying for those positions. The mountains of material on this topic alone could fill volumes, but the simple summary is that the transition from a manufacturing-based economy to an information and services-based economy, combined with rapidly accelerating dependence on technology in the typical job today, are creating enormous dislocations in the U.S. labor force. The Great Recession of 2008-2010, and the protracted length of the recovery that will inevitably follow, could be providing the most stark evidence imaginable of the rapidly and dramatically changing skill-sets demanded of our country’s work force. The grim reality could be that while job openings are finally starting to grow, there are simply not enough qualified people to fill them.