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Jobless Claims and Hiring

Friday, 20 August 2010 07:08

In an article on the rise in weekly unemployment claims reported yesterday the Post told readers that: "economists say that the weekly claims number needs to get into the low 400,000s and stay there before employers will start hiring new workers and bringing back laid-off ones." Actually, employers are already hiring more than 4 million workers a month. The problem is that roughly 4 million workers a month are also leaving their jobs, half voluntarily and half involuntarily. The decline in claims is an indication of an improving labor market, it is not a signal to employers to start hiring.

It is also worth noting that claims are likely to have to fall below 400,000 before we see a substantial uptick in hiring. Weekly claims had fallen to the 370,000-380,000 range before the economy started generating jobs in the fall of 2003 following the last recession. And the economy has roughly the same number of jobs today as it did then.

Comments (6)Add Comment
written by izzatzo, August 20, 2010 8:23
The decline in claims is an indication of an improving labor market, it is not a signal to employers to start hiring.

Oh yeah? Another stupid liberal economist who doesn't even understand the Paradox of Lift, a corollary in the labor to the Paradox of Thrift in the consumer market.

In the Paradox of Lift, when one employer hires, it signals other employers with incentives to hire as well. If only one hires, it doesn't make any difference, but if everyone hires, it lifts all labor boats. Eventually a tipping point occurs and the Paradox of Lift overcomes the Paradox of Thrift to restore aggregate demand.

That's why we're still in a deep recession, because you far leftists ran big deficits to snuff out all the free market signals that would have sparked more hiring. You people probably try to jump start your cars by refinancing them don't you.
written by Ivan Karamazov, August 20, 2010 10:03

Try decaf.
written by bailey, August 20, 2010 10:45
WONDERFUL post over at Huffington this morning, Dean, absolutely wonderful! But, IF we had even a slight chance to effect real change wouldn't we be seeing media stations climbing over each other to get you on today to discuss it?
Let's look at the facts. You were right & articulate in arguing against the total repeal of G-S without updating regulatory oversight, you were right in questioning the ancillary costs from the last huge (in % terms) lowering of our principal inflation measurement, and you were right in calling attention to the housing tsunami. But, where were the rest of our highly lauded Economists?
Was it really so difficult to see what's now so obvious? Or, were PK & the rest doing exactly what so many on Wall St. did - just what was expected of them? It's tough to speak truth to power.
The Main Source of Job Losses
written by libhomo, August 22, 2010 12:39
These days, it's state and local government layoffs. The private sector is hiring, albeit at an anemic pace. The main threat to the economy is the right's exploitation of the Great Recession to push through budget cuts.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.