129 – Nick Bunker on the Economic Recovery, Unemployment Measurement, and the U.S. Labor Market

Episode Summary

Executive Summary: Nick Bunker argues that U.S. labor market weakness after the Great Recession was more cyclical than structural, and that traditional indicators like the unemployment rate overstated slack. He highlights broader measures—prime-age employment, JOLTS, and the Beveridge curve—to show room for continued recovery, while also noting genuine long-run challenges such as declining male participation, fertility, mobility, and immigration.

Main Topics: Career path and labor-market data work at Indeed (Priority: 4/5): Bunker explains his shift from international affairs to economics during the 2008 crisis, and how Indeed’s Hiring Lab combines public and proprietary data to study labor markets in real time. Limits of the standard unemployment rate (Priority: 5/5): The conversation unpacks how the unemployment rate excludes discouraged workers who stop searching, making it less informative when labor force participation changes over time. Prime-age employment as a better slack indicator (Priority: 5/5): Bunker promotes the prime-age employment rate as a simpler and more useful gauge of labor market health and wage pressure than unemployment alone. JOLTS and gross labor-market churn (Priority: 5/5): He describes Job Openings and Labor Turnover Survey data as revealing hires, quits, layoffs, and separations beneath the net jobs number, with quits as a sign of labor-market strength. Beveridge curve and structural vs cyclical debate (Priority: 5/5): Bunker argues that post-recession shifts in the vacancy-unemployment relationship were temporary and reflected cyclical weakness, not permanent structural mismatch. Long-run structural issues: men, fertility, mobility, immigration (Priority: 4/5): The interview turns to persistent trends such as falling male participation, lower fertility, weaker geographic mobility, and the potential role of immigration in sustaining labor supply.

Key Arguments: The unemployment rate can fall because discouraged workers leave the labor force, not because they found jobs; this makes it an incomplete measure of slack when participation is changing. The prime-age employment rate avoids ambiguity about search status and tracks wage growth better than unemployment in recent years. JOLTS reveals that net monthly job gains conceal large gross flows of hiring, quits, layoffs, and separations, so a healthy labor market can feature both high churn and strong employment gains. High quit rates are positive, not negative, because they indicate workers have outside options, bargaining power, and confidence in labor demand. The Beveridge curve shift after the Great Recession looked structural at first, but later data showed it largely returned to its earlier relationship, implying persistent cyclical slack. The Fed’s willingness to keep policy accommodative likely allowed millions of workers to reenter the labor force; tightening earlier could have cut the recovery short. Men’s declining labor-force participation appears more structural than cyclical, especially among less-educated men, likely reflecting weak demand from automation, globalization, and labor-market polarization. Lower fertility and stricter immigration policy may reduce future labor supply, while weak mobility may reflect either improving nationwide labor-market similarity or reduced gains from switching jobs.

Data Points: Current unemployment rate: 3.9% - Referenced as the headline unemployment rate at the time of recording. Prime-age employment rate: 79.3% - Bunker says this remains below 2007 and 2000 levels. Monthly payroll growth in 2018: ~180,000 - Average monthly nonfarm payroll gain discussed as a strong post-recession pace. Jobs needed to keep pace with population growth: ~90,000 per month - Approximate monthly job creation required to hold the labor force steady given aging and slower population growth. JOLTS hires in a month: ~5.4 million - Illustrates gross hiring flows that are much larger than net job growth. JOLTS separations in a month: ~5.2 million - Used to show that net gains can coexist with massive churn. Prime-age male participation in the 1960s: ~95% - Compared with much lower contemporary rates to illustrate a long-run decline. Male labor-force participation in 1950: 87% - Cited as a historical benchmark for men’s participation. Contingent worker survey gap: 13 years - BLS did not field the contingent-worker survey for 13 years before resuming it. JOLTS coverage period: Since December 2000 - Bunker notes the survey begins in December 2000, limiting recession comparisons before then.

Pivotal Quotes: "there’s this many people either want a job because they have one or want a job and they don’t have one" — Nick Bunker: Explaining what the unemployment rate actually measures and why it excludes many non-searchers. "Quits may be a good thing" — Nick Bunker: Describing why rising quits signal a healthier labor market with more worker bargaining power and mobility. "the part of the labor market that was affected by the Great Recession is over. Anything else is all structural" — David Beckworth: Summarizing the pessimistic post-recession view that Bunker pushes back against throughout the interview.

Implications: Listeners should be cautious about using the unemployment rate alone to judge labor-market health. Broader data suggest more slack remained after the recession, while genuine long-term challenges still require policy responses on skills, family support, mobility, and immigration.