Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy / The 159 Million Jobs Mystery Why Hiring Feels So Hard
Transcript
- Lucas: The US economy had 159 million payroll jobs in May. There were 7.6 million open positions in April. And yet the unemployment rate is 4.3 percent and job seekers everywhere are telling you it feels harder than ever to land something. Luna: That gap — between the raw numbers and the human experience — is what I want to open up today. Because the JOLTS data from April just dropped, and it tells a story that's more complicated than 'lots of jobs available.' Lucas: Right. The headline number — 7.6 million openings — jumped from 6.9 million in March. That's a huge monthly increase, nearly 700,000 new positions posted. You'd think hiring would be booming. Luna: But actual hires barely budged. Nonfarm payrolls added about 172,000 jobs in May, which is fine but not 700,000-openings fine. So what gives? Lucas: Let me throw out a framework I've been chewing on. The quits rate — that's the share of workers who voluntarily leave their jobs — dropped to 2.1 percent in April. That's down from 2.3 percent a year ago, and way below the 3.0 percent peak we saw in 2022. Luna: So people are staying put. If you're not quitting, you're not opening up a slot for someone else to fill. That's part of the bottleneck. Lucas: Exactly. The quits rate is basically a confidence barometer. When workers feel secure they can find a better job, they quit. When they're uncertain, they stay. Right now they're staying. Luna: And that means the churn in the labor market has slowed. Companies have openings, but the pipeline of candidates — people actually looking to move — has shrunk. Lucas: There's also a skill mismatch. The Beveridge curve — that's the relationship between job openings and unemployment — has shifted outward since the pandemic. For any given unemployment rate, we now have more openings than we used to. Luna: That shift suggests structural friction. The workers who are unemployed don't have the skills for the jobs that are open, or they're in the wrong geography. Lucas: Geography is a big one. CNBC had a headline this week: 'Struggling to find a job? Try looking in Nevada.' That's not just a cute line — Nevada's economy is booming on the back of logistics, data centers, and diversifying beyond gaming. Luna: But if you're a former retail worker in Ohio, moving to Nevada isn't trivial. And the jobs that are open in Nevada — warehouse managers, electricians for data centers, truck drivers — those require specific skills or certifications. Lucas: Let's tie this back to the Fed. Kevin Warsh just chaired his first FOMC meeting last week. The statement emphasized that 'the labor market remains tight but is gradually rebalancing.' Gradual is the key word. Luna: And wage growth is still running above what the Fed considers consistent with 2 percent inflation. Average hourly earnings are up 3.9 percent year-over-year. That's not alarming, but it's not cooling fast either. Lucas: Right. If job openings stay elevated but hiring stays slow, you get a situation where employers bid up wages for the scarce workers who will move. That keeps wage inflation sticky even as overall demand softens. Luna: The Fed's real rate is already positive — the fed funds rate is 3.63 percent and core PCE inflation is around 2.8 percent. They may not need to hike again, but they can't cut until the labor market loosens more clearly. Lucas: And the bond market is pricing in exactly that. The ten-year breakeven inflation rate is at 2.25 percent, down from 2.26 last week. That tells you inflation expectations are well-anchored. The market expects the Fed to hold steady. Luna: So the 7.6 million openings aren't a sign of strength in the conventional sense. They're a sign of friction. Companies want to hire but can't find the right people, and workers don't feel confident enough to switch. Lucas: One more data point that I think is underappreciated: initial jobless claims dropped to 226,000 last week. That's low. Layoffs are not the story. The story is a labor market that's frozen in place — not melting, not boiling. Luna: If you're a job seeker, that's cold comfort. You're competing against fewer applicants maybe, but the hiring process is slower, employers are pickier, and the jobs that exist might not match your background. Lucas: I think that's the real takeaway for today. The macro numbers — 159 million jobs, 7.6 million openings, 4.3 percent unemployment — paint a picture of a market that is 'tight' in the aggregate but 'sticky' at the micro level. Luna: It's a reminder that averages hide a lot. And if you're listening and you're in the middle of a job search, the data doesn't make it any easier. But maybe understanding why it's so hard — the quits rate, the skill mismatch, the geography — gives you a clearer map. Lucas: Speaking of clearer maps — this show exists because we believe that walking through the economy together, one number at a time, helps people make better decisions. If that's been valuable to you, and you'd like to help us keep it ad-free and independent, a small gesture goes a long way. Luna: Yeah. We don't run ads, and listener support is what makes that possible. If you've ever found yourself explaining the quits rate to a friend after listening, that's exactly the kind of thing we hope for. Lucas: You can find us at buy me a coffee dot com slash fexingo. No pressure, genuinely. Just know that every bit of support helps us keep digging into data like today's JOLTS report. Luna: Alright. So back to that frozen labor market — what's the one leading indicator you're watching for a thaw? Lucas: I'm watching the quits rate. If it ticks back above 2.3 percent, that tells me workers are regaining confidence. That would mean more churn, more hires, and eventually more wage pressure — which the Fed would notice. Luna: And if it stays at 2.1? Lucas: Then we're in for a slow summer. Employers will keep complaining about a talent shortage, but the real shortage is mobility, not bodies. Luna: We'll check back when the May JOLTS data comes out next month. For now, I'm Luna. Lucas: And I'm Lucas. This is The Macro Memo. We'll see you tomorrow.