Thursday, December 10, 2009

Slowing layoffs but fewer hires 

Those who've listened to my radio program the last two weeks have heard me obsess over this survey of job openings, hirings and job separations. Thanks to Calculated Risk for the graph above. Those red bars indicate the rate at which workers are being involuntarily separated. That has fallen since March. But the rate at which jobs are being filled is also dropping.

That hire rate may be why the White House favors job summits. But Ed Morrissey noted yesterday that the threat of clean air regulation is creating job destruction in the coal industry. A local company filed papers to close its shop and lay off 93 workers; people I have spoken to in the last week indicate the firm was solvent, but saw no scope for growth of their capital. (Let this be a reminder -- the shutdown point for a firm can still be where capital earns an above zero return, but not as much as its opportunity cost.) As interest rates rise when inflation becomes a bigger concern than deflation, we will see more such decisions. Casey Mulligan offers the explanation for this pattern as a rise in marginal tax rates, rolling out over two years. His update yesterday shows the data generally following the pattern we see so far, though I would need to see almost two more years of data to be sure he was right.

Keith Hennessey highlights this morning one source of a tax increase: the Reid health care bill. Another is the use of credits and offsets in cap-and-trade; Ted Gayer of Brookings shows that a carbon tax would be less distorting and increase certainty for businesses. (h/t: Mankiw)