Apparently job ads determine interest rates
Jerome Powell was never a recruiter
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Last week, a New York Time article that made me throw up all over myself. Turns out the Fed is using job ads as a basis for interest rate hikes. My God…
👉Any recruiter can tell you job postings are a bullsh*t metric for gauging actual job openings.
The quote from the NYT (source):
“For the past year, the Fed has been focused on one measure of the labor market in particular: job openings. Powell has repeatedly noted that there are roughly twice as many vacant jobs as unemployed workers available to fill them.”
The article cites data from the US Bureau of Labor Statistics. Cool. But what’s the metric for determining openings? Has to meet 3 conditions, 1 of which:
“The employer is actively recruiting workers from outside the establishment to fill the position. Active recruiting means that the establishment is taking steps to fill a position. It may include advertising in newspapers, on television, or on the radio; posting Internet notices, posting “help wanted” signs, networking or making “word-of-mouth” announcements; accepting applications; interviewing candidates; contacting employment agencies; or soliciting employees at job fairs, state or local employment offices, or similar sources.” (source)
👉In other words: jobs ads.
What’s the problem with that? Job postings are not 1:1 with real job openings. Not even close.
Twitter just laid off 50% of their workforce. They have 84 jobs posted this morning.
Meta is laying off 10k workers. They have 373 jobs posted.
No chance all those are real. Still not convinced though?
FTX still has jobs live on LinkedIn, Built In and Google Jobs.
Lingering posting after meltdowns like this are just one scenario. Lots of others why postings and openings are the same:
👉”We’ll hire ‘em when we find ‘em.” aka those hires that are so hard & niche they take forever to fill. Or a position is created anytime someone with a skill match is interested.
👉”We’ll hire anywhere.” aka advertise this 1 opening in 10 different markets so they show up in geo-based searches.
👉”We pre-paid for that slot.” aka when you got a 10 pack of ads, you’d rather pipeline figure needs than light money on fire.
👉”We need to hire 10 of these” aka the opposite side, posting 1 job to recruit for a lot of openings with the same skill set.
👉”Where else should we advertise?” aka posting 1 job on 5 different sites. How confident are we in the government’s data scrubbing?
👉”Someone’s already doing this.” aka when the opening is real but the consultant doing the work now is getting cut. Not a net gain for the labor market.
I’m not saying job posting data isn’t interesting. It’s cool for general market awareness.
👉But using job ads to determine monetary policy is absolutely absurd. It’s not accurate enough to be actionable.👈
Perhaps Jerome Powell would benefit from a little cross functional work with the Fed’s talent acquisition team. 🤷
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