No jobs for the unemployed

Layoffs may be slowing, but hiring isn't picking up.

The hiring rate stood at just 3% in May, according to data released today by the U.S. Labor Department. That rate is the lowest the government has recorded since it began tracking new hires nine years ago.

More than one person leaves their job for every person hired. The number of new hires in May stood at 3.98 million. Meanwhile, the number of "job separations" -- which includes employees who were laid off, fired, quit or saw their contracts expire without renewal -- was 4.36 million.

There aren't nearly enough open jobs out there to re-employ the record numbers of jobless workers. In May, job openings declined 36% from the prior year to 2.6 million. To put the number of open positions in perspective, there are currently more than 14.7 million people out of work nationwide. That number rises to 25.5 million if we count all the underemployed people who are working part-time jobs due to lack of full-time employment, or who have given up seeking work. (See "True unemployment rate already at 20%.") 

The number of job openings would have fallen even further if it not for the government, which increased temporary hiring in recent months for the 2010 census. It added 326,000 jobs in May on top of 340,000 jobs in April. But it also saw more than 250,000 job separations during each of those months.

Not surprisingly, few people are voluntarily quitting this jobs. The "quits rate" is at the lowest point since the government began tracking the data. About 1.7 million people voluntarily left their jobs in May. That may sound like a lot, but it is down 34% from the prior year.

Until hiring recovers sufficiently to absorb more of the unemployed, consumer spending will likely remain depressed. That, in turn, will put a severe damper on any future recovery. Consumer spending accounts for 70% of all economic activity. And employees without paychecks can't spend them.