South By North Strategies, Ltd.

Free Exchange looks at the latest JOLTS data and sees how much progress still needs to be made in the labor market.

One thing that emerges, I think, is that while rising employment is a very positive sign the cost of the recession will continue to mount while there is a lot of labour-market slack. The reason is that when labour markets are tight, employers do a lot of the hard work of improving the distribution of labour in the economy. Workers are quicker to move toward higher pay, and firms work harder to draw people into the labour force and into employment, a process which helps labourers obtain new and useful skills.
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The government is right to worry about scarring from a long-period of high unemployment. And while there are policy steps that can be taken to address that scarring—including retraining programmes and unemployment benefits tweaked to create an incentive for workers to obtain new skills and stay in the labour force—there is nothing that the government can do that will be so effective as to make the labour market a seller’s market. That means growth, and a lot of it.