In the month everyone was arguing about whether the labour market had cracked, the job-to-job transition rate — the share of employed people who moved directly to a different employer without a spell of unemployment in between — was published on schedule, as it is every month, and was quoted in nothing I read.
I have complained in print about numbers being asked to carry more than they can. This is the opposite complaint and I think it is the more useful one.
Here is why that series is good. Almost every headline labour indicator has an interpretation problem baked in, because it aggregates people whose situations point in opposite directions. Unemployment counts anyone without work who is looking, which includes the person laid off in March and the person who quit in August because they had three offers. Payrolls count net change, which nets a boom in one sector against a collapse in another and reports the residual as if it were the state of the country.
A direct employer-to-employer move is not ambiguous in that way. Nobody leaves a job they have for a job they have to interview for unless they think the second one is better, and almost nobody does it when they are frightened. The rate is close to a straight reading of how much confidence exists inside the population that is already employed, which is the population every other series has the hardest time saying anything about.
It also moves before the things people watch. Transitions slow first, then quits, then hiring, then the unemployment rate, which is the last to turn and the one on every front page.
So why is it never quoted? Three reasons, and none of them is that it is bad.
It has no natural direction of alarm. A falling transition rate is bad and a rising one is also, in a different way, a story about churn and cost, so it does not resolve into a headline that says things are getting worse.
It is a rate about people who are fine. Nobody in it is suffering yet, and it therefore fails the basic test a labour statistic has to pass to become news, which is that it must be about somebody in trouble.
And it is revised, modestly, in ways that make a commentator who cited it last month look slightly wrong this month, which is a small professional cost with no offsetting benefit.
I want to be honest about the limits, because I have watched people pick up an underused indicator and immediately overuse it, and I would rather not be the cause of that. The series is noisy month to month and should be read as a three-month average or not at all. It behaves differently in sectors where changing employers is normal and where it is not, and the aggregate hides that. And I hold this view partly because it has confirmed things I already believed twice in the last four years, which is exactly the condition under which I trust myself least.
But it is on the table every month, computed carefully, free, and describing the thing everyone claims to be arguing about. I would trade the entire vacancy series for it and I am aware that nobody is offering.
