Tag Archives: jobs market

More About Jobs: Figures and Theory

According to recent data about job creating, there has been an increasingly upward trend of job creation in the country. The Wall Street Journal reported the number of jobs created in each month of the first quarter of 2014. In January, 139,000 jobs were added to the economy. February saw 178,000 jobs added to the market. And March’s job creation number:…(drumroll, please)… 191,000 jobs. The unemployment rate fell from 6.7% to 6.6%. It is important to keep in mind that February and January were the months of the brutal polar vortex. The economy is indeed thawing, according to the previously mentioned figures.

The Washington Post attributes March’s job creation figures to growth in specific American industries, such as construction, finance and automobile production. The construction industry added 20,000 jobs, which is 4,000 more than the average across the past three months. The financial industry added 5,000 jobs to firms of different sizes. The automotive industry exceeded analyst expectations. Sales rose 6% to 1.5 million.

If these trends continue, unemployment could become less and less of a problem. Since each month of the first quarter of 2014 produced more jobs than the previous month, it is safe to say that the US economy is gaining momentum in the labor market. We cannot be sure if these trends will continue, but we can hope that they do. If all goes well, the US economy could see more than 200,000 jobs added this month. This, in turn, could help increase the nation’s economic output, which could combat the current economic slump.

A New York Times article discusses the theory of job creation. According to the article, the people who give others jobs, employers, do not do it out of the kindness of their hearts. This is similar to why producers produce goods in Adam Smith’s Wealth of Nations. They do it because it is in the best interest of their firms. They do it so their firms can create a supply that meets the demand, and so they do not lose to competitors. These people, however, are not the jobs creators. The job creators are the consumers and investors. They are the ones who provide firms with money, which is used to expand and improve production.

To put all of this together, one could attribute the increasingly upward trend of jobs added to the economy to the fact that people are consuming and investing more. This could be a feasible claim. When firms have more money, they can produce in larger quantities and more efficiently. Using this theory, it seems that the way to continue this trend of job creation is to consume and invest more. Every time a firm makes money and expands, it will need to hire more people to keep everything running as smoothly as before the expansion. This money comes from purchase of the product and investments. These firms can afford to hire more people when they have more money.

(Revised) Harder Time for College New Grads

As we learned from Labor Economics class, a bachelors’ degree could secure a better job compared to those without a college degree. When browsing the job ads, we did see a lot of job descriptions containing a requirement of bachelors’ degree.

“Such difficulties are not a new phenomenon,” the economists say in an essay published in the New York Fed’s latest Current Issues. “Individuals just beginning their careers often need time to transition into the labor market.”

Regarding this problem, I believe that new grads may need some time figuring out what they really want to do after graduation. As I mentioned before, the younger workers may switch their jobs more easily compared to those older workers. To avoid this happening, people should start thinking of their career seriously during college because the job market is not so promising.

However, an article from Wall Street Journal stated that college grads between 22 years old and 27 years really are finding it tougher to find jobs that require a bachelor’s degree than has been the case in the past. Using Census Bureau and Labor Department data, the economists find that the fraction of college grads between 22 and 27 who were working in jobs that don’t generally require a bachelor’s degree rose to 46% during the 1990-91 recession, fell significantly during the 1990s boom and was down to 34% by 2001. This “underemployment rate” rose sharply after the 2001 recession and rose further after the 2007-09 recession, the economists find. It stood at 44% in 2012.

In my understandings, the jobs required a bachelors’ degree do not have enough openings for new grads because of the low performance of economic environment. The jobs market is similar to goods market where the buyers are employers and the sellers are job seekers. However, the supply of good jobs openings is much less than the demand. The new grads have to choose those jobs with lower requirements for degrees. This is a waste of human capital – people pay for college and spend time studying hard but end up getting a job that may not need the skills gained from college at all.

Regarding this problem, I have some suggestions on job market. Firstly, Facebook is successful in tech companies because it opened up a new market of social networking. Similar to this innovation, the government or the employers could create some new types of jobs. Secondly, the job function should be more specified (i.e. required a specific skill) that people will start to learn the exact skills needed by the jobs.

To sum up, both “buyers” and “sellers” should come up with ways to improve this unemployment situation. For employers (buyers), they may create more opportunities for young workers; for job seekers (sellers), they could improve their skills in order to better meet the needs for those companies.