Exciting but fake news about our strong economy

Summary – Yesterday we got more great news about the economy: there are more openings than unemployed. It is fake but exciting clickbait. This is “we are ignorant because we read the news,” chapter one million.

Fake news

Yesterday’s hot headline:
There are now more job openings than workers to fill them

Very exciting news! Great news about the economy! Let the self-righteousness flow at the thought of all those open jobs unfilled while lazy people watch TV. It is a simple story, visible in one graph (click to enlarge these graphs). Purple is the number of job openings; red is the number of unemployed. The two were almost equal in January 2001.

Since the recession, unemployment has fallen while the number of openings has increased. In April 2018 there were more openings than unemployed. If we matched the unemployed with the jobs: presto, no unemployment!

Number of Job Openings and Unemployed

The narrative describes an economy at full employment, with shortages of skilled workers. There is one problem with this story. The best indicator of the supply-demand balance in a free market is price. For workers, that price is the hourly wage (75% of workers are “production and supervisory workers” who are paid per hour). Growth in real wages peaked in January 2015 at 2.3%/year. In April it was only 0.2%.

Real hourly earnings of workers - YoY percent gain

Unraveling the puzzle

The number of job openings comes from the Job Openings and Labor Turnover Survey of employers conducted by the Bureau of Labor Statistics. An employee quitting is an actual event, as is hiring and firing an employee. All have consequences. But what does it cost to electronically post a job opening – one with high requirements and low pay? Nothing.

Employers have become creative in playing the job market. During the history of the survey, there were always more hires than openings – until August 2014. Now there are more openings than hires. More openings than hires every month, while the growth rate in real wages slows.

Job Openings and Hires

So which signal tells the truth? Trust the one which reflects real money in motion: wages. When there are widespread skill shortages, real wages will rise.

Employers do anything for workers, except pay them more

These are all stories of employers who have rigged the game. Workers pay for their own training. Employers demand much and give little. Especially note the descriptions of pilots and truckers jobs: expensive training, hard work, long hours, employers complaining about shortages of workers – but no big pay increases.

Heather Long at the WaPo debunked the simple skills shortage story in “America has a massive truck driver shortage. Here’s why few want an $80,000 job.” In an earlier story, she shows how trucking firms are raising wages – and raising their prices much faster.


See the April JOLTS survey report and the BLS’ Highlights report.

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36 thoughts on “Exciting but fake news about our strong economy

  1. this is an example of why both parties support open borders. Cheap labor for the right, voters for the left.

    I do remember Obama trying to stop Mexican truckers from entering the U.S. due to the lack of safety inspections on Mexican trucks and their willingness to work for peanuts delivering NAFTA goods. Haven’t seen any follow up articles on where Mexican truckers can go in the US. But as long as we continue to allow a steady stream of immigrants illegal and otherwise into our country, wages will continue to be flat.

    There is a positive side for consumers though. This keeps prices lower. It would be interesting to see how many truckers are recent immigrants.

    1. Paul,

      Yes, that explanation nails it.

      “This keeps prices lower.”

      Immigration has many economic effects. As you note, depressing wages in affected jobs. And boosting aggregate GDP. It’s net effect on individual households depends on how its workers’ wages are affected!

      Another factor, almost never mentioned: immigrants increase population, requiring construction of more public infrastructure (eg, roads, schools) and hiring more govt workers. But our mostly low-skill immigrants do not generate the taxes needed to pay for these. So their weaken the finances of States and localities with high numbers of them. Like California.

      “It would be interesting to see how many truckers are recent immigrants.”

      That’s a great question! I hadn’t thought of that. Note the requirements for a Federal (interstate) commercial drivers license. “Must provide to the State proof of citizenship or lawful permanent residency … Be able to speak and read English to drive a CMV in the United States. In addition, the state written exams will only be given in English. ”

      For some answers, see these.

      Immigrant truck drivers: Shhhh. We don’t talk about it.” at FlooetOwner — “Yet recruiting immigrants to be drivers appears to be a successful tactic, despite trucking’s reluctance to discuss it.

      America’s trucking industry faces a shortage. Meet the immigrants helping fill the gap.” at Public Radio International (funded by good liberals). Immigrants are helping to keep truckers’ wages low!

      “’The trucking industry is searching for people,’ says Justin Lowery, who studies the role of immigrants in US trucking at George Mason University in Fairfax, Virginia. Lowery says there is an ‘aging out’ of truck drivers and recent immigrants, willing to work long hours, are filling some of the gap. …

      “That survey {Census Bureau’s 2012 American Community Survey.} also found that the proportion of immigrant drivers varies from state to state, with California at 46 percent, the highest concentration of foreign-born drivers, followed by New Jersey at 40 percent.”

      Immigrants Making an Impact in the Trucking Industry” at the website of Joshua Goldstein (immigration attorney, one of the groups directly benefiting from open borders), 17 July 2017.

      “According to data provided by the Bureau of Labor Statistics (BLS), there are approximately 1.2 million long-haul truck drivers currently working in the United States. Of this number, 225,000 of those drivers, or nearly 19 percent, are immigrants. To put this figure into the proper perspective, only around 12 percent of all U.S. residents are foreign born.”

      Here is a detailed report, but old: “Who’s Behind the Wheel? Immigrants Filling the Labor Shortage in the U.S. Trucking Industry” by Zahra Sohail Khan at the George Mason Institute for Immigration Research, December 2014. The Institute might have published more current info.

  2. Larry, check graph at beginning. I believe you mean purple=unemployed and red=employed.

    I’ll continue reading.

  3. All those articles about the lack of STEM skilled employees seem disingenuous to me. I have a BS in Electrical Engineering and a recent Associate in Technical Arts – Robotics and Electronics Tech certificate (3.96GPA!), and yet I’ve applied to literally dozens of robotics and electronics technical positions with never a response beyond “Thanks for your resume…”.

    It’s like the job openings are not intended to actually acquire new employees. Is this all a game to increase the quota of H1B visas?

    I have no animosity towards Indian tech’s, I’ve always enjoyed them as peers. However, they are willing to work brutal hours for very low wages, and employers are taking advantage of them. I seem to have some skill as a financial trader, so we’re doing fine. Guess I’ll stay self employed.

    1. James,

      “Is this all a game to increase the quota of H1B visas?”

      That’s a brilliant observation. To get the H1Bs, corps have to demonstrate scarcity. I’ll look around for articles about that.

  4. Anecdote is not data, but I can tell you that where I work we’re pretty shorthanded. But that’s because HR never hires anyone who actually applies. They post the job and people apply. Then HR sits on it until a.) The applicant takes a different job, because they have a family to feed, or b.) The applicant gets a better offer somewhere else. So while in theory we have openings, in practice we aren’t hiring. Make of that what you will. I don;t how widespread this sort of thing is.

    The training budget has been cut to nothing, and the last few hires we actually got have had God’s own job getting any gas money when they have to go drive somewhere to take a class or get certified. Training at this point is a sham. This sort of thing was unheard of when I was starting out those many years ago.

    1. The Man,

      You are describing how profits are kept high by burning the future. It’s a common practice in America these days, in both govt and business.

      We see it in government, with the collapse of non-military infrastructure spending. Which is made much worse by the graft that inflates the cost of what we buy by 2x. or 3x. Or more.

  5. “We see it in government, with the collapse of non-military infrastructure spending. Which is made much worse by the graft that inflates the cost of what we buy by 2x. or 3x. Or more.”

    An old friend of mine who used to work as a welding inspector said more or less the same thing. The company he worked for went out of business and for a long time he kept up his certs because he was sure that infrastructure spending would pick up. Bridges getting old, and all. But he ended up in sales.

    One of his jobs got ended because the company was looted by corporate criminals. Most employees were owed money when the place showed down. he actually got paid because he made it clear that he had kept copies of certain emails, and he was one of the few paid in full. It’s actually come to that.

    The other thing I see is people touting a good economy on account of a good stock market, but the two are not equal and coordinate. I keep wondering if we’re in Dutch tulip territory.

    1. The Man,

      “The other thing I see is people touting a good economy on account of a good stock market, but the two are not equal and coordinate.”

      There is at most a weak correlation between economic indicators (eg, GDP, jobs) and stock market prices.

      “I keep wondering if we’re in Dutch tulip territory.”

      That’s a common worry. I believe something different has happened to bring valuations to these levels, for so long — with so many highly valued but unprofitable companies. My guess (guess!) is that the market structure has changed. A large fraction of daily volume is done by machines running algorhythms. At some point these may have the market operating differently than when people made the decisions.

      For a simple and small example: the prices on used books at Amazon are largely set by the retailers algos. In the early days they used simple rules. Such as prices at a dime more than the average (“since we’re better”). If there were two or three vendors for a book, and two used this rule — prices would relentlessly climb. I’d see pulp westerns or sci fit selling for hundreds or thousands of dollars. Now they use more sophisticated algos, and prices are reasonable.

      The algos trading stocks are vastly more sophisticated, run by hundreds of firms around the world. Perhaps their interaction has produced unanticipated strange results. Like we see today.

    2. When ever I see worry about stocks, I try to remember Random-Walk-Down-Wall-Street by Malkiel . As long as most Americans are investing through 401K etc, it could be a bubble. But likewise, with all the retirement and persons with 401K type diversified accounts, I think it will be a slow fall, more so than a tulip bubble. Too much money and vested interests involved. But the caution is that such beliefs for at least two recent occasions, housing and dotcom, did not stop large market adjustments.

    3. John,

      Slow declines are the usual prediction in times of high valuations. They almost never happen. People start to sell – for whatever reason – which sparks a rush for the door. Supply – demand balances tilt from sellers scarcity to buyers scarcity in a heartbeat.

      “Too much money and vested interests involved.”

      None of that makes a dimes difference.

    4. There’s one more alternative, which happened in the 1970s. Dollar prices can stay range bound for an extended period while inflation whittles away the real value of equities and brings PE ratios back toward the mean.

    5. John,

      (1) “There’s one more alternative, which happened in the 1970s. ”

      The great 1973-74 crash brought stock valuations back to average levels. Also, inflation has little effect on stock valuation metrics.

      (2) “while inflation whittles away the real value of equities and brings PE ratios back toward the mean.”

      False. First, price to earnings ratios are a ratio of two nominal numbers, and unaffected by inflation. That is, they are unchanged if expressed in real terms.

      Second, profits (and hence pe ratios) were increased by inflation in the 1970s due to use of first-in-first-out accounting (FIFO), which produced phantom inventory profits. Hence many companies, esp those heavily affected by this, also showed profits by last-in-first-out (LIFO) accounting.

    6. John,

      Please read what I said more closely: “The great 1973-74 crash brought stock valuations back to average levels.” The SP500 PE was 18 in 1969. it collapsed to 8 in 1974, and never recovered to the 1969 level until 1987.

      The nominal level of the SP500 matters not at all from a valuation perspective. I don’t know what your point was in showing it.

      Your statement about inflation and stock prices & PEs was wrong. Admit it and move on.

    7. I don’t agree. The 74 crash brought valuation down to 8x very dramatically, but temporarily, just as the 2008-2009 crash did. The market quickly recovered to about 12x (close to the historic mean) in less than a year. From then PE valuations drifted back down to as low as 7 before finally breaking out convincingly and sparking the great bull market of the 80s and 90s in the fall of 1982. Even as the valuation multiples languished, however, the nominal value of the market began to climb. Inflation masked an eight year period of of real value consolidation as earnings caught up with stock valuations. That period worked off the excesses of the prior bull and built the base for the later boom.

      While there will certainly be one or more severe contractions to correct what currently appear to be valuation excesses, a rapid reaccelerating of inflation could significantly mask the depth of the correction in terms of nominal prices.

      Past history shows that most periods of excessive debt have been worked off through inflation rather than financial collapse https://www.amazon.com/This-Time-Different-Centuries-2009-10-01/dp/B01MQZYLBX/ref=sr_1_2?s=books&ie=UTF8&qid=1528502958&sr=1-2&keywords=this+time+is+different+reinhart+rogoff&dpID=41xM8gvm%252BnL&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=srch My belief is that the same will happen with the current global debt bubble. A bear market in valuation multiples, if not in nominal equity valuations, would be a logical corollary. The period when this would presumably happen will coincide with the maximum drawdown of Baby Boomer savings, creating significant pressure for a valuation bear market, but the inflation will mask the nominal impact.

    8. John,

      Whatever, I see you are hopeless.

      “My belief is that the same will happen with the current global debt bubble. ”

      Yes, that’s what most commenters do when proven wrong: shift the subject. Whatever, dude.

    9. I actually responded on nominal price versus real equity valuation, which was my point from the start. I added what I believe will be the trigger of the expected real value correction as well as the nominal price inflation. You didn’t respond to my further analysis of the 1970s. I’ll stand pat. We’ll agree to disagree on this one as neither of us is likely to budge.

    10. John,

      Since you changed the subject (from stock valuations to macroecon effects of debt), I put this in a second comment.

      “most periods of excessive debt have been worked off through inflation rather than financial collapse”

      I haven’t read the great Reinhardt-Rogoff book, but I’d like to see where they say such a thing. It was certainly not true in 19thC Britain, where they had periods of high public debt and periods of high private debt — none of which were worked off with either inflation or financial collapse (although they had the booms and busts inherent to free market systems). Nor in the US, where the massive Civil War debt was worked off with neither inflation nor collapse (that is, the legitimate govt’s debt; the Confederacy insurgency defaulted).

      The period of most massive private debt (relative to the economy) until our time was the 1920s. It was worked off with collapse AND deflation. No inflation. I recommend reading “How Short-Term And Long-Term Debt Cycles Work“. It’s a good intro. You’ll learn much from it. Here is their relevant graph.



    11. Rheinhardt and Rogoff track a large number of debt cycles in 66 countries over eight centuries. I don’t have access to the book right now as I am on a plane, but they clearly showed in a majority of the cases that debt overhangs were more likely to be worked off with inflation than through deflationary collapse. You don’t have to go further than Britain. The 19th century was an anomaly as the pound was on the gold standard. Over 800 years numerous monarchs chose to inflate (debase) away debt rather than pay it off in real terms. The western world enjoyed significant real growth throughout most of the period, which made it far easier for debts such as the U.S. Civil War obligations to be paid in real dollars. In a more recent example post empire Britain sustained a great deal of inflation as it addressed its WWII debt. The pound declined from more than $5 U.S. to $1.33 while the value of the dollar declined 90%. We’ve been witnessing the phenomenon of inflating away government debt in the western world as the real rate of interest paid to risk free investors has been significantly negative for an extended period. Perhaps that’s changing with the recent rise in rates, but I doubt it. Modern governments do not have the fortitude to accept financial pain without further inflating the currency.

  6. Because companies are more interested in shareholder value i.e. stock performance instead of long term corporate performance they will not address the wage issue. Just look at Sears here in Canada or ToysRUs in the u.s.
    Both purposely starved after leverasged buyouts by “investment firms.”

    But the piper is coming to be paid. According to PewResearch 10,000 americans retire every day, 300,000 a month or All of MIAMI retires on mass each month. For the next two decades. Across the board: unskilled, semi skilled, professionals, entrepeneurs. Immigration tends to be the lower skilled.

    Already we are seeing companies slowing operating hours, not taking on new projects because of reluctance to pay the wages for the needed labour. Eventually they will need to decide: this quarter’s results or next year’s production.

    1. MGTOW,

      Yes, the Boomers’ retirement will create turmoil. But the higher rates of college education in the following generations – plus skilled immigrants — will fill much of the gap.

      But more important, the next industrial revolution appears to be beginning. It becomes increasingly likely that this will destroy large numbers of jobs at all levels. If so, unemployment rather worker shortages will be the problem. See my posts about this.

  7. We’re about ten years (perhaps less) from automation replacing the need for OTR drivers. Moving to driverless for trucks, which primarily travel on interstates, is far easier than for passenger vehicles primarily traversing city streets. Driver shortage solved soon!

    1. John,

      That’s the betting. Too early to say for sure, of course! But the question is “when” not “if.”

      This is often given as a reason people don’t want to become truckers. I’m skeptical, but it is possible.

  8. First time comment for me. Since the conversation involves the trucking industry I felt I should share my experience. I have been driving trucks for 40 years. The problems with the trucking industry do mirror the problems with so many other industries in the United States.

    First of all, (at the risk of sounding cliche) many of the younger generations seemingly lack the work ethic that older generations have. Many young people I meet just don’t like the idea of having to work for a living.

    I can remember when truck driving was a “fun” job. Those days are long gone. I wish I had a dollar for every time I have heard the comment “all you do is drive!” The public has such a huge misconception about trucking. The volume of traffic on the roads combined with the ignorant and (literally) malicious behavior of so many people in their cars has made driving a truck one of the most stressful jobs there is. You cannot let your guard down for a moment.

    Wages in the trucking industry mirror the picture that we see across the board in the United States. Stagnant. The money I make now driving a truck is the same as I made in the mid 80’s. A good friend of mine works for a large trucking company and a few months ago the CEO of that company was quoted as saying “there is no good reason why a truck driver should make $80k a year.” This despite the fact that my friend and his coworkers work 6 days a week, 70 hours a week with only 30 hours off in between.

    Over regulation. I’m not aware of many other professions that have the level of regulations required to operate a CMV. I remember some years ago David Letterman doing a bit on his show when the government was looking for a new defense secretary. His joke was that if they could find a candidate who can pass the CDL written test they will have found the perfect person.

    Immigration? At least 10 years ago I noticed a large influx of Slavic truck drivers. Same old story. Cheap labor. Immigrants willing to work long hours for substandard pay. Many of them unable to read or speak English, yet entrusted with the responsibility of piloting a big truck down the road. American corporations with the full knowledge and assistance of the United States government, have been actively recruiting immigrants to come here and take the jobs for decades. Yet the American public is so uniformed and so easily manipulated.

    On the subject of automated trucks, I don’t believe that it will ever happen. The same old “technology is the answer to all our problems” marketing that the mainstream media does so well. Usually on behalf of the corporations that have a vested interest in that technology. You only need to look at the all the recent news stories about Tesla’s automated cars to see where that idea is heading. Same technology will be used in automated trucks. I could be wrong though. In America the safety of the public has never taken priority over profits. Wait until that first incident when an 80,000 pound automated rocket steamrolls a tour bus full of senior citizens on their way to the casino.

    Just my 5 cents.

    1. Keith,

      Thank you for sharing your first-person experience. It’s always useful to hear from people on the front lines.

      “You only need to look at the all the recent news stories about Tesla’s automated cars to see where that idea is heading.”

      There are 5 levels of autonomous driving. The Tesla tech is level 2 (partial automation). It has been recklessly misrepresented by Tesla as Level 3. Or 4. Real self-driving systems — with Lidar sensors and better software — will do much better.

      The first airplanes were crude and dangerous. In a decade they were in routine (albeit limited) commercial use. People almost always overestimate short-term tech progress, but underestimate long-term progress.

    2. Simple intermediate step for automated OTR. Limit them to interstates, turning the roads into a new form or railroad, which effectively they already are. Build terminals at strategic locations outside metros. Use local shorthaul to deliver the containers to end locations.

    3. John,

      That’s logical. On the other hand, my guess is that the tech will advance far too fast for such regulation. More likely, different limitations will be required for different levels of autonomous vehicles. What’s appropriate for a Level 5 systems won’t work for Level 3.

      See Wikipedia’s description here.

  9. Well Larry, and John, I understand the (mistaken) idea that technology is the answer to all our woes. That idea is embedded in our brains at a very early age. Automated trucks will only (maybe) solve the problem from a corporate standpoint. What will become of the tens of thousands of people who presently make a living driving trucks? Will more immigrants be hired to work in those new distribution centers?

    I find it interesting that the conversation is usually first from the standpoint of profits and efficiency. Rarely about the greater good. Rarely about what is best for people. Maybe I have become more compassionate in my old age.

    In my lifetime I have not seen many technologies created that have not created several problems of their own. Hence the deception. Maybe if we approached our problems from a human standpoint first we would be better off.

    1. Keith, Larry likely has gotten to understand me will enough to know that I was being ironic when I said that technology would “solve” the driver crisis. Since you are new to the dialogue, I owed you better.

      I live in Memphis. Our two largest job categories are truck driver and warehouseman. Each of those job categories are going to be dramatically impacted by technology over the next decade. I have great concern as to what that means for the citizens of our community and have tried to raise the awareness of that predictable crisis among the local leadership with little success.

  10. Ah, I see. As you say, John, being new to the conversation I didn’t understand.

    You know, we have to attempt as best we can to think outside the walls set up by the system to constrain our thoughts and conversations. If we don’t, our conversations remain nothing but that. Conversations. Not to be confused with solutions.

    I am convinced that most of the world’s problems are a result of a universal lack of compassion. “It doesn’t affect me, so who cares?” In a profit motivated system true people oriented solutions become impossible. It is human nature. Profit is the single biggest constraint placed upon change or solutions.

    I know religion is not a popular subject. Personally I find the Bible very interesting. In the Apostle Paul’s letter to Timothy ( 1 Timothy 6:10) the Apostle writes: “For the love of money is root of every evil.” There is no truer statement.

    1. I grew up in an era where profit and social responsibility were not considered mutually exclusive.

    2. John,

      All the Boomers did. The change away from that is part of the Right’s successful roll-back of America to before the New Deal.

      The Left has allowed that, just as the Right has allowed the Left’s massive reconfiguration of American society.

      Both movements have now crushed all opposition. It is the pursuit phase, where victorious forces chase a fleeing beaten foe. What makes our situation more pitiful is our whining and dreams of the Great Day When the Walls Will Tumble and the Righteous Rise. Dreamtime for proles.

      My guess – guess! — is that opposition forces will arise to these movements. But the moderates have been destroyed in the cross-fire between Left and Right. Any powerful new forces rising will be extreme. Perhaps very extreme.

    1. Keith,

      That is propaganda, negative knowledge – designed to mislead you. A very apt cite to a post about fake economic news. I’ll point out just a few, although almost every paragraph is misleading.

      (1) “Predictably, the Trump administration was quick to take credit, although the trend of falling employment has carried on for eight years now.”

      Every president takes credit for good economic news. With rough justice, since Dolack and his fellow partisans would immediately blame Trump if the rate was rising.

      (2) “you might have noticed that happy days aren’t exactly here again.”

      There is nothing in the following text to support this statement. He never defines “happy days.” There are some indications that the US is approaching full employment, which is as good at it gets. Perhaps Dolack’s standard of “happy days” is Heaven. OK, but you have to die to get there.

      (3) “The real U.S. unemployment figure”

      This is a staple of Right-wing and Left-wing propagandists, their similar methods showing that they are cousins under the skin. There is no “real” number for unemployment, or inflation, or GDP, etc. These are concepts, not terms defined by God. Which is why the US government shows them using multiple definitions, from narrow to broad.

      (4) “But this still doesn’t mean the number of people actually working is increasing. …A better indication of how many people have found work is the “civilian labor force participation rate.”

      Neither of those is an indication of how many people are working. Both are rates, not a level, despite Dolack’s dancing. The measure of the number of people working is the number of people working. Again, there are defs from broad (everybody with any paid employment) to narrow (full-time in non-farm jobs).

      (5) “This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s”

      This is false on multiple levels. Keynesian economics did not “breakdown”. The labor force participation rate changes due to many factors, some good and some bad. Since the 1970s access to disability income has risen, more people are going to college, more people getting advanced degrees, and more people retiring. The latter is important and will become more so: earlier retirement and an aging population (the 1970 date Dolack cites was the low point – 28, it is 38 now).

      (6) “Fewer people at work and they are making less”

      Totally false. The numbers he cites are for entirely different things than the “number of people at work” and “how much they make.”

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