The unemployment rate jumped back to 9 percent in April, after declining a full 1 percentage poin... more The unemployment rate jumped back to 9 percent in April, after declining a full 1 percentage point between November 2010 and March. Both the decline and the increase came as a surprise to many. Though signs of a recovery had appeared in the aggregate economy as early as the second quarter of 2009, the unemployment rate had stayed persistently high, above 9 percent, for more than 20 months. Then over the course of four months, the rate unexpectedly fell 1 percentage point, reflecting both an increase in household employment and a reduction in labor force participation. Most recently, the rate jumped up by 0.2 percentage point in April. Hence, over the past five months employment (as measured in the Bureau of Labor Statistics household survey) has increased by close to 800,000, while the number of unemployed workers has declined by about 1.3 million.
Nonfarm payroll employment grew by 94,000 in November, just slightly below the forecasted gain of... more Nonfarm payroll employment grew by 94,000 in November, just slightly below the forecasted gain of 100,000. This follows October’s strong job growth of 170,000, revised up from 166,000. However, gains for September were revised down by more than half to 44,000. After these revisions, the average monthly increase in employment stands about 118,000 for 2007, significantly lower than the past three years. The average monthly employment gain in the third quarter now stands at 77,000, which is the lowest since the third quarter of 2003. The unemployment rate remained unchanged from the previous two months, at 4.7 percent.
It has been five years since the beginning of the Great Recession, and the labor market recovery,... more It has been five years since the beginning of the Great Recession, and the labor market recovery, while far from great, has been steady. Nevertheless, we are still more than 3 million jobs short of the pre-recession level. While these numbers underscore the severity and depth of the recession, looking at a host of labor market indicators gives one a mixed message about where we are in terms of the recovery; even though there has been gradual improvement, there are still persistent weaknesses.
Can two countries, or two different states, with similar technologies, resources, and policies ex... more Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to s... more Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. This paper assesses whether labor market frictions, in the form of searching and matching, can help explain movements in the labor wedge—the gap between the marginal rate of substitution (MRS) and the marginal productivity of labor in a perfectly competitive business cycle model. Results suggest that those frictions are not able to explain fl uctuations in the labor wedge, per se. However, the introduction of extensive and intensive margin shows that measuring the MRS in terms of total hours artifi cially introduces pro...
The recent recession, now called the Great Recession by many, had significant adverse effects on ... more The recent recession, now called the Great Recession by many, had significant adverse effects on the labor market overall. Even though the recovery has apparently begun and output has been growing since the second quarter of 2009, payroll employment is still about 6 percent less than it was at its prerecession peak in December 2007. New jobs are being created, but at a relatively modest pace—about 100,000 jobs a month on average have been added to nonfarm payrolls since the beginning of 2010.
Job polarization has been an important feature of the US labor market for some time. The term ref... more Job polarization has been an important feature of the US labor market for some time. The term refers to the shift in the types of jobs that are available in the labor market, where, owing to the disappearance of occupations that handle routine tasks, the types of jobs remaining are manual labor jobs at one end of the spectrum and jobs requiring abstract skills at the other. Discussion about job polarization generally tends to center around the notion that technological change has replaced workers who primarily engage in routine work and has effectively “hollowed out” the pool of available jobs. In contrast, occupations that predominantly require abstract skills have gained ground, as they are less susceptible to technological change. In this post, we want to shed some light on the unemployment experience of workers with different occupational skills and their transitions into different states of employment or unemployment.
November employment fell by 533,000 in the largest one-month drop since December 1974, coming in ... more November employment fell by 533,000 in the largest one-month drop since December 1974, coming in far worse than expectations. Additionally, payrolls in September and October were revised down to losses of 403,000 and 320,000, respectively. Since the start of the recession in December 2007, job losses in the United States have totaled about 1.9 million, roughly 1.3 million of which have come in just the past three months. The unemployment rate also continued its upward path, increasing 20 basis points to 6.7 percent, the highest rate seen since September 1993.
Payroll employment has declined substantially over the course of past two years. Since December 2... more Payroll employment has declined substantially over the course of past two years. Since December 2007, when the most recent recession began, payrolls declined by more than 8.4 million, about 6.1 percent. At the same time, we experienced one of the sharpest increases in the unemployment rate in U.S. history, from 5 percent to 10.1 percent this past October, before coming down to 9.7 percent. Even though it is widely thought that the aggregate economy came out of the recession in the second quarter of 2009, we have not yet seen a major improvement in the labor market. As a result, many are concerned about the potentially “jobless” nature of the recovery (see our Commentary on the topic). Measures of the demand for labor are still weak, and firms could get away without hiring because there is a significant pool of workers who could, in principle, supply more hours.
July’s employment report was welcome news, especially after the slowdowns in payroll growth that ... more July’s employment report was welcome news, especially after the slowdowns in payroll growth that had occurred over the previous two months. The U.S. economy added 117,000 new jobs, according to the Bureau of Labor Statistics report. That is slightly better than the average monthly gain of the second quarter (about 105,000), but definitely worse than that of the first quarter (about 165,000). Manufacturing, trade, professional and business services and education and health posted significant gains in July, as in recent months. Government payrolls, on the other hand, kept declining. July’s decline was 37,000, most of it due to state and local governments (their payrolls declined −23,000 and −16,000, respectively). The temporary help services sector, which is thought of as a leading indicator for future payroll growth, was basically flat.
The American Time Use Survey (ATUS), which has been sponsored by the Bureau of Labor Statistics a... more The American Time Use Survey (ATUS), which has been sponsored by the Bureau of Labor Statistics and conducted by the U.S. Census Bureau since 2003, provides information about how people in the United States spend their time on an average day 1. By including valuable information about what activities people do during the day and how much time they spend doing each, the survey creates a larger picture of employment. For instance, on an average day in 2006, people spent 3.40 hours working. However, only about 45 percent of the entire population (51 percent of men and 39 percent of women) worked on an average day. Among the civilian population, the average daily number of work hours was 7.59 (8.04 hours for men and 7.04 for women).
Employment losses moderated in May, as nonfarm payrolls dropped by 345,000, much less than the av... more Employment losses moderated in May, as nonfarm payrolls dropped by 345,000, much less than the average loss of 643,000 of the prior six months. This was the smallest payroll decline since September 2008, and revisions to March and April lessened those months’ losses by a total of 82,000. The moderation was driven by fewer losses in construction; trade, transportation, and utilities; and professional and business services, as well as larger gains in education and health.
Our research on workers losing and gaining jobs strongly suggests that the long-term unemployment... more Our research on workers losing and gaining jobs strongly suggests that the long-term unemployment rate has not shifted permanently higher. Rather, labor markets are just adjusting more slowly because of lackluster leading economic growth and low labor market turnover.
The decline in nonfarm payroll employment slowed to 247,000 in July, and the unemployment rate un... more The decline in nonfarm payroll employment slowed to 247,000 in July, and the unemployment rate unexpectedly ticked down by 0.1 percentage point to 9.4 percent in July. However, that number may be misrepresenting true labor market slack, as 442,000 people exited the workforce.
Economic Commentary (Federal Reserve Bank of Cleveland)
In this Economic Commentary, we focus on the first round of Paycheck Protection Program (PPP) loa... more In this Economic Commentary, we focus on the first round of Paycheck Protection Program (PPP) loans granted beginning in March 2020 until early August 2020, when turbulence in the labor market was pronounced, in order to demonstrate the PPP’s effects on local labor markets. We find that PPP loans helped mitigate the negative impact of the pandemic recession on state-level employment growth. States that received most of their funding early in the loan period had smaller employment declines than did states that received comparable funds later in the period.
This paper presents a flow-based methodology for real-time unemployment rate projections and show... more This paper presents a flow-based methodology for real-time unemployment rate projections and shows that this approach performed considerably better at the onset of the COVID-19 recession in the spring 2020 in predicting the peak unemployment rate as well as its rapid decline over the year. It presents an alternative scenario analysis for 2021 based on this methodology and argues that the unemployment rate is likely to decline to 5.4 percent by the end of 2021. The predictive power of the methodology comes from its combined use of real-time data with the flow approach.
Economic Commentary (Federal Reserve Bank of Cleveland)
Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a ru... more Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate—why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun’s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.
Over the last decade, 11 states have restricted employers' access to the credit reports of job ap... more Over the last decade, 11 states have restricted employers' access to the credit reports of job applicants. We document a signifi cant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals.
The unemployment rate jumped back to 9 percent in April, after declining a full 1 percentage poin... more The unemployment rate jumped back to 9 percent in April, after declining a full 1 percentage point between November 2010 and March. Both the decline and the increase came as a surprise to many. Though signs of a recovery had appeared in the aggregate economy as early as the second quarter of 2009, the unemployment rate had stayed persistently high, above 9 percent, for more than 20 months. Then over the course of four months, the rate unexpectedly fell 1 percentage point, reflecting both an increase in household employment and a reduction in labor force participation. Most recently, the rate jumped up by 0.2 percentage point in April. Hence, over the past five months employment (as measured in the Bureau of Labor Statistics household survey) has increased by close to 800,000, while the number of unemployed workers has declined by about 1.3 million.
Nonfarm payroll employment grew by 94,000 in November, just slightly below the forecasted gain of... more Nonfarm payroll employment grew by 94,000 in November, just slightly below the forecasted gain of 100,000. This follows October’s strong job growth of 170,000, revised up from 166,000. However, gains for September were revised down by more than half to 44,000. After these revisions, the average monthly increase in employment stands about 118,000 for 2007, significantly lower than the past three years. The average monthly employment gain in the third quarter now stands at 77,000, which is the lowest since the third quarter of 2003. The unemployment rate remained unchanged from the previous two months, at 4.7 percent.
It has been five years since the beginning of the Great Recession, and the labor market recovery,... more It has been five years since the beginning of the Great Recession, and the labor market recovery, while far from great, has been steady. Nevertheless, we are still more than 3 million jobs short of the pre-recession level. While these numbers underscore the severity and depth of the recession, looking at a host of labor market indicators gives one a mixed message about where we are in terms of the recovery; even though there has been gradual improvement, there are still persistent weaknesses.
Can two countries, or two different states, with similar technologies, resources, and policies ex... more Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to s... more Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. This paper assesses whether labor market frictions, in the form of searching and matching, can help explain movements in the labor wedge—the gap between the marginal rate of substitution (MRS) and the marginal productivity of labor in a perfectly competitive business cycle model. Results suggest that those frictions are not able to explain fl uctuations in the labor wedge, per se. However, the introduction of extensive and intensive margin shows that measuring the MRS in terms of total hours artifi cially introduces pro...
The recent recession, now called the Great Recession by many, had significant adverse effects on ... more The recent recession, now called the Great Recession by many, had significant adverse effects on the labor market overall. Even though the recovery has apparently begun and output has been growing since the second quarter of 2009, payroll employment is still about 6 percent less than it was at its prerecession peak in December 2007. New jobs are being created, but at a relatively modest pace—about 100,000 jobs a month on average have been added to nonfarm payrolls since the beginning of 2010.
Job polarization has been an important feature of the US labor market for some time. The term ref... more Job polarization has been an important feature of the US labor market for some time. The term refers to the shift in the types of jobs that are available in the labor market, where, owing to the disappearance of occupations that handle routine tasks, the types of jobs remaining are manual labor jobs at one end of the spectrum and jobs requiring abstract skills at the other. Discussion about job polarization generally tends to center around the notion that technological change has replaced workers who primarily engage in routine work and has effectively “hollowed out” the pool of available jobs. In contrast, occupations that predominantly require abstract skills have gained ground, as they are less susceptible to technological change. In this post, we want to shed some light on the unemployment experience of workers with different occupational skills and their transitions into different states of employment or unemployment.
November employment fell by 533,000 in the largest one-month drop since December 1974, coming in ... more November employment fell by 533,000 in the largest one-month drop since December 1974, coming in far worse than expectations. Additionally, payrolls in September and October were revised down to losses of 403,000 and 320,000, respectively. Since the start of the recession in December 2007, job losses in the United States have totaled about 1.9 million, roughly 1.3 million of which have come in just the past three months. The unemployment rate also continued its upward path, increasing 20 basis points to 6.7 percent, the highest rate seen since September 1993.
Payroll employment has declined substantially over the course of past two years. Since December 2... more Payroll employment has declined substantially over the course of past two years. Since December 2007, when the most recent recession began, payrolls declined by more than 8.4 million, about 6.1 percent. At the same time, we experienced one of the sharpest increases in the unemployment rate in U.S. history, from 5 percent to 10.1 percent this past October, before coming down to 9.7 percent. Even though it is widely thought that the aggregate economy came out of the recession in the second quarter of 2009, we have not yet seen a major improvement in the labor market. As a result, many are concerned about the potentially “jobless” nature of the recovery (see our Commentary on the topic). Measures of the demand for labor are still weak, and firms could get away without hiring because there is a significant pool of workers who could, in principle, supply more hours.
July’s employment report was welcome news, especially after the slowdowns in payroll growth that ... more July’s employment report was welcome news, especially after the slowdowns in payroll growth that had occurred over the previous two months. The U.S. economy added 117,000 new jobs, according to the Bureau of Labor Statistics report. That is slightly better than the average monthly gain of the second quarter (about 105,000), but definitely worse than that of the first quarter (about 165,000). Manufacturing, trade, professional and business services and education and health posted significant gains in July, as in recent months. Government payrolls, on the other hand, kept declining. July’s decline was 37,000, most of it due to state and local governments (their payrolls declined −23,000 and −16,000, respectively). The temporary help services sector, which is thought of as a leading indicator for future payroll growth, was basically flat.
The American Time Use Survey (ATUS), which has been sponsored by the Bureau of Labor Statistics a... more The American Time Use Survey (ATUS), which has been sponsored by the Bureau of Labor Statistics and conducted by the U.S. Census Bureau since 2003, provides information about how people in the United States spend their time on an average day 1. By including valuable information about what activities people do during the day and how much time they spend doing each, the survey creates a larger picture of employment. For instance, on an average day in 2006, people spent 3.40 hours working. However, only about 45 percent of the entire population (51 percent of men and 39 percent of women) worked on an average day. Among the civilian population, the average daily number of work hours was 7.59 (8.04 hours for men and 7.04 for women).
Employment losses moderated in May, as nonfarm payrolls dropped by 345,000, much less than the av... more Employment losses moderated in May, as nonfarm payrolls dropped by 345,000, much less than the average loss of 643,000 of the prior six months. This was the smallest payroll decline since September 2008, and revisions to March and April lessened those months’ losses by a total of 82,000. The moderation was driven by fewer losses in construction; trade, transportation, and utilities; and professional and business services, as well as larger gains in education and health.
Our research on workers losing and gaining jobs strongly suggests that the long-term unemployment... more Our research on workers losing and gaining jobs strongly suggests that the long-term unemployment rate has not shifted permanently higher. Rather, labor markets are just adjusting more slowly because of lackluster leading economic growth and low labor market turnover.
The decline in nonfarm payroll employment slowed to 247,000 in July, and the unemployment rate un... more The decline in nonfarm payroll employment slowed to 247,000 in July, and the unemployment rate unexpectedly ticked down by 0.1 percentage point to 9.4 percent in July. However, that number may be misrepresenting true labor market slack, as 442,000 people exited the workforce.
Economic Commentary (Federal Reserve Bank of Cleveland)
In this Economic Commentary, we focus on the first round of Paycheck Protection Program (PPP) loa... more In this Economic Commentary, we focus on the first round of Paycheck Protection Program (PPP) loans granted beginning in March 2020 until early August 2020, when turbulence in the labor market was pronounced, in order to demonstrate the PPP’s effects on local labor markets. We find that PPP loans helped mitigate the negative impact of the pandemic recession on state-level employment growth. States that received most of their funding early in the loan period had smaller employment declines than did states that received comparable funds later in the period.
This paper presents a flow-based methodology for real-time unemployment rate projections and show... more This paper presents a flow-based methodology for real-time unemployment rate projections and shows that this approach performed considerably better at the onset of the COVID-19 recession in the spring 2020 in predicting the peak unemployment rate as well as its rapid decline over the year. It presents an alternative scenario analysis for 2021 based on this methodology and argues that the unemployment rate is likely to decline to 5.4 percent by the end of 2021. The predictive power of the methodology comes from its combined use of real-time data with the flow approach.
Economic Commentary (Federal Reserve Bank of Cleveland)
Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a ru... more Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate—why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun’s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.
Over the last decade, 11 states have restricted employers' access to the credit reports of job ap... more Over the last decade, 11 states have restricted employers' access to the credit reports of job applicants. We document a signifi cant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals.
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Papers by Murat Tasci