Do Big Cities Help College Graduates Find Better Jobs?

Jaison R. Abel and Richard Deitz

Although the unemployment rate of workers with a college degree has remained well below average since the Great Recession, there is growing concern that college graduates are increasingly underemployed—that is, working in a job that does not require a college degree or the skills acquired through their chosen field of study. Our recent New York Fed staff report indicates that one important factor affecting the ability of workers to find jobs that match their skills is where they look for a job. In particular, we show that looking for a job in big cities, which have larger and thicker local labor markets (that is, bigger markets with many buyers and sellers), can give workers a better chance to find a job that fits their skills.

Just Released: April Empire State Manufacturing Survey

Jason Bram and Richard Deitz

According to the most recent Empire State Manufacturing Survey, manufacturing conditions are continuing to improve in New York State, but only barely. The headline general business conditions index from the April 2013 report was 3.1—down 6 points from March and not much above zero. The positive reading indicates that activity is growing, though its decline suggests that the pace of growth has slowed. Employment indexes, however, climbed higher and suggested a modest increase in hiring and hours worked. It will be particularly important to see how next month’s report turns out to get a clearer sense of whether regional manufacturing conditions are getting better or if the slow growth signaled by the past few reports is fizzling out.

Is Job Polarization Holding Back the Labor Market?

Stefania Albanesi, Victoria Gregory, Christina Patterson, and Ayşegül Şahin

More than three years after the end of the Great Recession, the labor market still remains weak, with the unemployment rate at 7.7 percent and payroll employment 3 million less than its pre-recession level. One possibility is that this weakness is a reflection of ongoing trends in the labor market that were exacerbated during the recession. Since the 1980s, employment has become increasingly concentrated among the highest- and lowest-skilled jobs in the occupational distribution, due to the disappearance of jobs focused on routine tasks. This phenomenon is called job polarization (see Autor et al. [2003], Acemoglu and Autor [2010], Jaimovic and Siu [2011], and Abel and Deitz [2011]).

Just Released: NY Fed’s Erica Groshen Becomes Commissioner of Labor Statistics

Jamie McAndrews

What could cap being a Liberty Street Economics blogger/editor? Apparently, for one of us, becoming a chief bean-counter. Yesterday, our colleague Erica L. Groshen was sworn in as the nation’s new Commissioner of Labor Statistics.

Good News or Bad on New York City Jobs?

Jason Bram and James Orr

Unlike much of the nation, New York City has seen a robust rebound in employment since the recession. In early 2012, employment here reached 3.86 million, the largest number of jobs ever recorded. Yet the city’s unemployment rate has risen in recent months and is now 10 percent—its peak during the recession—and well above the 5 percent rate seen before the downturn. This lack of improvement reflects the fact that the number of employed residents of the city has not rebounded at all from its losses during the 2008-09 downturn. While commuters from outside the city have always been a part of the employment scene, particularly in Manhattan, the recent divergence between the brisk growth in jobs in the city and the lack of growth in the number of employed residents in the city is unprecedented. Moreover, this gap between the two measures continues to widen, raising some questions as to how strong New York City’s recovery actually is. In this post, we explore several alternative explanations for the lack of growth in the employment of city residents in the face of a sharp recovery and expansion of jobs. While there are several potential explanations, the stagnation of resident employment remains largely a puzzle.

Just Released: Regional Economic Press Briefing on Job Polarization and Rising Inequality

Jaison R. Abel and Richard Deitz

Over the past three decades, the United States has seen substantial growth in both high- skill and low-skill jobs, while growth of those in the middle has stagnated. At the same time, a growing gap in wages between jobs that pay the most and those that pay the least has emerged. As we discussed in a previous blog post, this combination of trends is often referred to as job polarization, and it is happening in much of the developed world. In this post, we examine the extent to which job polarization has occurred in upstate New York, downstate New York, and Northern New Jersey. We find that job polarization has been significant in all of these places, contributing to a sharper than average rise in inequality in downstate New York and Northern New Jersey.

Conclusion: How Low Will the Unemployment Rate Go?

Jonathan McCarthy, Simon Potter, and Ayşegül Şahin

A major theme of the posts in our labor market series has been that the outflows from unemployment, either into employment or out of the labor force, have been the primary determinant of unemployment rate dynamics in long expansions. The key to the importance of outflows is that within long expansions there have not been adverse shocks that lead to a burst of job losses. To illustrate the power of this mechanism, we presented simulations in a previous post that were based on the movements in the outflow and inflow rates in the previous three expansions. These simulated paths show the unemployment rate declining to a level well below current consensus predictions over the medium term.

Reconciling Contrasting Signals in the Labor Market: The Role of Participation

Stefania Albanesi, Ayşegül Şahin, and Joshua Abel*

The contrasting movements in the employment-to-population ratio (E/P) and the unemployment rate recently have been striking and puzzling. The unemployment rate has declined 1.7 percentage points since the unemployment peak in October 2009, but the E/P ratio has increased only 0.1 percentage point.

Skills Mismatch, Construction Workers, and the Labor Market

Richard Crump and Ayşegül Şahin

Recessions and recoveries typically have been times of substantial reallocation in the economy and the labor market, and the current cycle does not appear to be an exception. The speed and smoothness of reallocation depend in part on the structure of the labor market, particularly the degree of mismatch between the characteristics of available workers and newly available jobs. Such mismatches could occur because of differences in skills between workers and jobs (skills mismatch) or because of differences in the location of the available jobs and available workers (geographic mismatch). In this post, we focus on skills mismatch to assess the extent to which the slow pace of the labor market recovery from the Great Recession can be attributed to such problems. If skills mismatch is much more severe than usual, we would expect the unemployment rate to remain higher for longer and the workers subject to such mismatch to have worse labor market outcomes.

The Bathtub Model of Unemployment: The Importance of Labor Market Flow Dynamics

Ayşegül Şahin and Christina Patterson*

An alternative to Okun’s law to understand unemployment dynamics is to examine the evolution of the unemployment inflow and outflow rates. (For more on Okun’s law, see yesterday’s post.) A useful analogy is a bathtub: we can think of the unemployment rate (a stock) as the amount of water in a bathtub. Changes in the amount of water in the tub are determined by the rate at which water pours into the tub relative to the rate at which it drains out. For example, if the inflow of water is equal to the outflow, the amount of water in the tub remains constant. But if the rate of water flow into the tub is suddenly increased by turning the faucet to its maximum level, then the water level rises rapidly. A similar dynamic occurs in the stock of unemployed workers when there is a rapid increase in job losses during a recession. In this post, we focus on the flow dynamics in an economic recovery to help understand how the unemployment rate may evolve.