Steady Work: Chelm and California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Chelm was the mythical village of East European Jews, the subject of Jewish folklore and humor. Irving Howe drew on one of the Chelm tales for the epigraph to his collection of essays published in 1966, Steady Work .

Once in Chelm, the mythical village of the East European Jews, a man was appointed to sit at the village gate and wait for the coming of the Messiah. He complained to the village elders that his pay was too low. ‘You are right’, they said to him, ‘The pay is low. But consider: the work is steady.’

Today, with nearly 2.3 million Californians unemployed, any work is attractive—steady or not. However, even today, the California labor market remains highly volatile, with workers moving in and out of jobs with surprising frequency. In previous posts I have discussed the amazing job creation and destruction numbers for California—even in a month that the unemployment rate moves only slightly, over 200,000 jobs are being created and another 200,000 jobs are being destroyed. Almost equally amazing are the numbers regarding the movement among workers in existing jobs.

Mr. Richard Holden, our Bureau of Labor Statistics (BLS) Regional Commissioner, directs us to one set of data indicating the on-going turnover in existing jobs, the monthly BLS “Job Openings and Labor Turnover Survey” (www.bls.gov). Mr. Spencer Wong of EDD notes a second set, the Census Bureau’s Local Employment Dynamics (LED) series. The LED series includes several measures of workers moving among jobs, including (i) “separations”, workers employed by a business in the current quarter but not in a subsequent quarter, (ii) “new hires”, workers hired during the current quarter, and (iii) “turnover rate”, defined as hires plus separations/total employment. The chart below summarizes these measures for the third quarter of 2008.

The third quarter of 2008 is the most recent quarter for which data is available for California. The California information is on the left, and information for one county, Alameda County, is on the right. Specific data is available for each county.

What movement of workers among jobs! Among the striking features of volatility:

*Within the one quarter, there were over 3.5 million instances of job separations.
*Within the one quarter, there were over 2.5 million instances of new hires.
*Within the one quarter, the turnover reached 10.5% of total employment.

In this particular third quarter of 2008, in which the state was in the process of its recession job-shedding, a higher-than-usual part of the turnover was due to involuntary separations. Yet, even in times when the economy has been strong in California, job turnover has been high. In the third quarter of 1999, California’s unemployment rate was around 5%, and the net job flow was a positive 158,840 (compared to a negative 395,538 jobs in the chart above). However, in this quarter, separations still stood at 3,506,569 and new hires at 3,065,588. Similarly, in the third quarter of 2004, when the state unemployment rate was around 6.1% , the turnover rate was 11.9%, including 3,359,421 separations and 2,459,351 new hires.

This high job turnover, thus, can be expected to continue even after the recession. In fact, as job security across sectors and occupations may decline in the aftermath of the recession and the rise of globalization, turnover may even increase. Watching for the messiah may soon be left as the only steady work.

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