What the Beveridge curve shows about hiring and unemployment : Planet Money : The Indicator from Planet Money Unemployment is low and job listings are at a record high: This shows up in a chart called the Beveridge curve. What's driving this? We talk to a former brewery manager to find out.

What the Beveridge curve tells us about jobs

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Ow, ow, ow, ow. OK, so we're just going to come right out of the gate with it because today's jobs numbers deserve an air horn.

WOODS: Four-hundred twenty-eight thousand jobs were added to the U.S. economy in April, and unemployment stayed at 3.6%, which is one of the lowest in recent memory.

MA: Not too shabby, America. Not too shabby.

WOODS: Adding to the good news in the jobs report - there was more news that workers will welcome from another report that dropped earlier in the week. That report was that Job Openings and Labor Turnover Survey, also known as the JOLTS report. And just like in the previous few months, in March, there were nearly two job openings for every unemployed person. There are just a lot of ads for jobs, if you look online or in your local newspaper. It is at record levels.

MA: And the numbers do tell an intriguing story. But I think to really understand what's going on in this moment and to really understand just how much employers cannot hire fast enough, it might help to look at a picture - a chart, actually. The chart is for the Beveridge curve. It's this thing named after a British economist named William Beveridge. And, well, this curve has completely shifted from where it was pre-pandemic. It is in overdrive. This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.

WOODS: And I'm Darian Woods. Today on the show, we will go behind the Beveridge curve to figure out what the heck is happening in our jobs market.


MA: Kate Bahn is the chief economist at Equitable Growth, an economic think tank, and Kate sees how unusual the situation in labor markets is by looking at a graph known as the Beveridge curve.

KATE BAHN: I like the Beveridge curve a lot. I think it is really useful.

WOODS: Would this be in your top three economic curves?

BAHN: It might be in my top three economic curves.

WOODS: I didn't ask her what the other top two were, but...

MA: (Laughter).

WOODS: ...Yeah. The Beveridge curve just shows the unemployment rate along the horizontal axis and the job openings rate on the vertical axis. It's a simple downward slope - just a line going down, basically. When you have low unemployment, employers have to keep their job listings open for longer, so the job openings rate is higher. And when there's higher unemployment, employers aren't looking for workers as much.

MA: And what's happening now in the pandemic has shifted the Beveridge curve out. So the same relationship is happening, but it's just blown out by job listings, and there are way more job listings than we'd expect, even with the low unemployment we have.

BAHN: Job openings are currently about 50% higher than they typically are - a lot of people going into new jobs at a scale that we haven't really seen.

WOODS: And to better understand what is behind this shift in the Beveridge curve - this explosion of job listings - we're actually going to go to a brewery.

MA: And that is why they call it the Beveridge curve.


MA: It's all about beer.

WOODS: No, no, no.

MA: (Laughter).

WOODS: It's William Beveridge (laughter). But I like the thought. We are going to meet Alicia Lopez. And at the start of the pandemic, Alicia was working at a brewery, but, you know, that hadn't been her career plan.

ALICIA LOPEZ: Honestly, I wanted to be an artist. So, like, immediately after high school, I went to a private art college. And then I had my first child while I was in college, and there weren't a whole lot of jobs, so I just kind of stayed working in restaurants and breweries.

MA: Alicia managed to mix in her passion by holding Pints & Print nights, and she'd been thinking about studying towards something else - maybe art education. But after working a while at bars and breweries, it became her career.

LOPEZ: And before you know it, you're like, oh, my gosh, I've been at this job for this amount of years? Like, it really goes by fast.

WOODS: And when the pandemic hit, Alicia volunteered to stay home from the brewery, but she knew what was about to happen.

LOPEZ: I filled out the unemployment application, and I was just waiting for them to officially lay me off. I had it in my browser, and then I was able to apply for unemployment, like, immediately.

MA: Alicia was receiving unemployment for a few months, plotting her next steps, but the quick money of the brewery pulled her back in. So Alicia got rehired as a server in the summer. And while she says some customers were supportive, others were not.

LOPEZ: Some people were really, really nasty. Like, I had regular who I had known for years who was just, like - I remember him complaining about the masks, complaining that he couldn't have more than six people at a table, like, giving me a really hard time. And then he stiffed me. And I had never really had that. I mean, I've had people not leave me a tip before, but from someone who I had known.

MA: Shaking my head right now.

WOODS: Yeah, not good tipping culture. So Alicia goes home totally frustrated. And the next day, she brings over her dad for a Fourth of July dinner, something she hadn't done in a long time because of the pandemic. And over dinner, she gets some more news about her shifts over the last few days.

LOPEZ: I was told that, you know, three people that I'd worked with had COVID. And I was like, OK, it's time. It's time to do something different.

MA: While she was quarantining, Alicia had time to think about a plan she'd been hatching, a plan to become a special education teacher. She'd actually ordered transcripts already and thought now was the perfect time to send in her application for a certificate program in special education teaching.

WOODS: A month or so later, she is accepted, and she leaves the brewery. And Alicia's brewery and, really, bars and restaurants and hotels all across the country were starting to post listings to replace people like Alicia, but they weren't getting many takers.

LOPEZ: A lot of people were in situations like me, where they're college educated. They had a hard time getting jobs, and then new opportunities started to open up for them during the pandemic. You know, I have friends that went and worked at Costco during the pandemic and didn't return back to the brewery that we worked at. UPS and, you know, other companies are starting to pay more money. So it's really hard to go back to a job - and I'm not saying the particular job that I worked at but the industry in general - to go back to these careers where they're underpaid, undervalued, and, you know, they're really qualified to do other things as well.

MA: And Kate Bahn, the economist at Equitable Growth, she says Alicia's story is a typical illustration of the new labor market we're in - you know, this economy with lots of job listings and a shifted out Beveridge curve. Along with a lot of familiar facets of the pandemic economy, like unpredictable child care and early retirements, Kate also says that employers in lower-wage industries like hospitality had been keeping wages pretty low for a long time, and now workers had the power to look for better pay and conditions. And part of that was a side effect of the pandemic unemployment benefits that were extended over the past couple of years.

BAHN: So when you can take time to search for a job, you're going to end up in a better job. And so the pandemic might have given people not only just the sort of self-reflection to think where do my passions lie but just the time. And maybe when people had those unemployment benefits, it meant that they could just take a month versus a day to find a new job. They didn't have to accept the first job.

WOODS: Kate says that this might initially cause some pain for employers, like Alicia's brewery, desperately seeking workers. But Kate thinks that overall this shifted Beveridge curve economy is a good sign. It definitely points out something unusual, like, even more unusual than a normal recession and subsequent bounce-back. It might mean that economic policies could work differently at the moment, for example. But ultimately, all these job openings means that workers can choose jobs closer to what they really want to do.

BAHN: That is what makes the economy more dynamic. It's what makes it more productive. It's what leads to growth in the economy, high levels of productivity, things like that. And so it is a good thing, but it feels really stark. I mean, as quick as the crisis led to an economic decline, the quick recovery, too, is just going to have some tumultuousness to it because it takes a long time to get workers into good jobs.

MA: That time gave Alicia time to reflect, and she says if we'd interviewed her in some parallel universe where the pandemic never happened, there would probably be a 50/50 chance she would still be pulling pints.

LOPEZ: There is beauty in the chaos. So it, like, gave me time to actually get the things together that I needed and to really reflect on where I was going at that time.


MA: There's beauty in the chaos. I love that.

WOODS: Beauty in the chaos - yeah, that is a great phrase. I am going to borrow that.

This show was produced by Nicky Ouellet, with engineering from Josh Newell. Jess Kung fact-checked the show. Viet Le is our senior producer, and Kate Concannon edits the show. THE INDICATOR is a production of NPR.

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