Tuesday, November 3, 2015

By One Measure, Labor Market Tightness is at Its Highest Level of the Past 15 Years

 Stephen Williamson, Vice President and Economist at the St Louis Fed, writes:

A nonstandard measure of unemployment is the insured unemployment rate, which is the number of people currently receiving unemployment insurance (UI) as a percentage of the labor force. This is a useful measure, as there is an observed action (filing for UI) associated with being among the insured unemployed. The conventionally unemployed, on the other hand, are those who report that they are not employed but searching for work, an action which cannot be verified. Insured unemployment also leaves out the long-term unemployed, who are no longer eligible for UI.
If we plot the Beveridge curve (which is a measure of labor market tightness typically measured by plotting the labor market vacancy rate against the unemployment rate) obtained using the insured unemployment rate rather than the standard unemployment rate...The resulting labor market tightness measure is currently at its highest level of the past 15 years. Further, tightness has increased at a high rate since the beginning of 2014.

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