What Job Openings Tell Us

Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

A high ratio of unemployed to job openings means that the unemployed are competing a lot for jobs, many news reports say, when it fact it could indicate the opposite.

It's true that a reduction in labor demand - from, say, a new tax on employers - would motivate employers to get by with fewer employees. As they do, employers would reduce job openings and lay off workers. One result would be fewer job openings and more unemployed people, and thereby more unemployed people per job opening.

But a reduction in labor supply in the form of additional subsidies for unemployed people would have similar effects. Unemployed people would be choosie r about the jobs they accept, especially the low-wage ones. With more help for people after layoffs, employers and employees in struggling industries would do less to avoid layoffs, especially layoffs from low-paying positions. Either way the result would be more unemployed people.

Subsidies for unemployed people also make labor more expensive as low-wage jobs are more likely to end by layoff and unemployed people can be choosier about the jobs they take. When labor is more expensive, employers have an incentive to get by with fewer employees and for that reason may well reduce the number of job openings they have.

In this way a reduction in labor supply by itself, a reduction in labor demand by itself or both together can increase the ratio of unemployed to job openings. It makes little sense to point to a high ratio as proof that labor demand is low, because it could just as easily tell us that labor supply is low. All a high ratio tells us is that the labor market has contracted, and that we could readily and more reliably detect without any data on job openings by just looking at the unemployment rate itself, or the ratio of employed to population.

My conclusion is not new to labor economists, who have long understood that supply factors could increase the ratio of unemployed to job openings. Christopher A. Pissarides, a professor at the London School of Economics, literally wrote the book on job openings and unemployment, and his book explains how more generous unemployment compensation would have these effects (see Figure 9.2 from his latest edition; I thank my colleague Robert Shimer for this reference).

The black series in the chart below shows the ratio of unemployed to job openings. The chart also shows in red the marginal tax rate on labor income (the extra taxes paid, and subsidies forgone, as a result of working, expressed as a ratio to the income from working) for a typic al head of household or spouse based on the ever-changing eligibility and benefit rules for safety-net programs. The ratio increases fastest between the first half of 2008 and the first half of 2009, just when the marginal tax rate series increases the most. Both series peak in late 2010 and decline thereafter. Neither series has returned to its prerecession level.

Ratio of unemployed per job opening is c alculated from Bureau of Labor Statistics seasonally adjusted monthly figures for number of unemployed and total nonfarm job openings, as provided by the St. Louis Fed. Marginal tax rates are as calculated by Casey B. Mulligan in “The Redistribution Recession” (Oxford University Press, 2012).

For the reasons mentioned above, the chart is by no means proof that supply was a major factor during the recession. That proof requires other sorts of analyses, which are shown in my book.

Nevertheless Paul Krugman continues to cite the high ratio of unemployed to job openings as evidence that demand, rather than supply, contracted the labor market: “There are now four job seekers for every job opening, which means that workers who lose one job find it very hard to get another” (see Page 9 of “End This Depression Now!”). He and other economics commentators citing this fact never explain why the very same ratio should not be interpreted as a drop in supp ly, or as a combination of reduced supply and reduced demand. Instead they contend that the labor market would rebound with still more help for the unemployed.

Believe it or not, Keynesian economics is not the only way to interpret the job openings data.

Chevrolet Spark E.V. to Have Debut at Los Angeles Auto Show

General Motors Chevrolet's Spark Electric Vehicle.

Ever since the Chevrolet Spark first appeared in 2009, the nameplate of that gas-powered minicar has seemed a bit misleading. Chevrolet will take a big step toward solving that problem later this month at the Los Angeles auto show, where it will introduce an all-electric Spark that will go on sale next year. The Spark EV will join a short but growing list of all-electric production cars in the United States, including the Nissan Leaf and 2013 Ford Focus Electric.

Chevy also said that its next-generation MyLink system will make its debut in the 2014 Impala.

“The Spark EV and next generation of MyLink demonstrate Chevrolet's commitment to delivering the advanced technologies that today's consumers will be eager to adopt and truly value,” Chris Perry, vice president for global Chevrolet marketing, said in a statement.

Annalisa Bluhm, a spokeswoman for General Motors, said in an e-mail 
that she could provide no details on the Spark EV's driving range or pricing.

At Tesla\'s Party, Superchargers and Delivery Dates

The Tesla Motors party in Manhattan on Monday night was loud and crowded with company supporters and would-be owners. The reason for the gathering was initially left mysterious, but a loud partisan cheer went up in the room when it was announced that the Model S sedan had been chosen as Motor Trend's 2013 Car of the Year. Earlier in the month, Automobile magazine named the car its Automobile of the Year.”

There was other news to be had around the edges of the Tesla gathering. The company has already unveiled its California network of 480-volt “Superchargers,” but Christina Ra, a company spokeswoman, said Tesla would soon announce a similar Boston-to-Washington corridor, with the first station to be opened in Milford, Conn., “in the coming weeks.” In a meeting with editors of The New York Times on Tuesday, Tesla's founder and chief executive, Elon Musk, and George Blankenship, the vice president for worldwide sales and ownership experience, said another stat ion was planned for Wilmington, Del.

In a news conference at the Monday evening event, Mr. Musk said of Supercharger networks, “We expect all of the United States to be covered by the end of next year.” He also promised “three hours of driving for half an hour of charging,” and said that Tesla owners' use of the network will be free “not for a little while, but forever.”

It is unclear just how many Model S cars have been delivered to customers. In its third quarter shareholder letter earlier this month, Tesla said it had delivered “over 250 Model S sedans.” Asked to clarify at the event, Mr. Musk said, “Substantially more than 250.”

Tesla has said it is now producing 200 cars a week, or about 10,000 a year, but it wants to double that figure quickly. At the event, Franz von Holzhausen, the company's chief designer, said, “I'm not worried about our short-term goals - we're focusing on quality - but getting to 20,000 cars a year is a big ger challenge.” Tesla has taken more than 13,000 reservations for the Model S, and Mr. von Holzhausen said that the company was now experiencing “its best quarter for orders.”

Jeremy Snyder, general manager for Tesla in the Southwestern region, said he thought the company's production has “crossed the Rubicon,” with deployment “on a really good track.”

Although reservation holders have been assigned waiting list numbers, Ms. Ra said their cars have not always been produced in sequence, because it makes sense to manufacture them in batches with similar option packages. She said the sequence will be more closely followed in the future “because it's so important to our early customers.”

One of those early customers who attended the event Monday night is Tim Waire, who works in technology at Quest Diagnostics. Mr. Waire is waiting for a red Signature Performance version of the car with the larger 85-kilowatt-hour battery, and is number 737 in line. He plans to commute weekly in the car between Baltimore and northern New Jersey, a distance of 200 miles each way. Mr. Waire's Tesla was originally promised for delivery in September, but he appears to be patient. “It doesn't surprise me as an early adopter that the date slipped a little bit,” he said.

Mr. Snyder said Mr. Waire would get his car “any day now.” Mr. Musk said it “literally should be on its way to him.”

Ford Introduces Transit Connect Wagon and a Bit of Category Confusion

Ford Motor Transit Connect is the first wagon to exceed 30 m.p.g., Ford says.

DEARBORN, Mich. - Ford introduced its 2014 Transit Connect Wagon in a news conference here on Tuesday. A people-mover based on the small Transit Connect commercial van that has been available since 2009, it shares that vehicle's distinctive high-roof shape and will be offered with either a 120.6-inch wheelbase and three rows of seats or a 104.8-inch wheelbase and two rows of seats.

With three rows of seats, the Transit Connect Wagon can hold seven passengers, just like a minivan. Both second- and third-row seats fold flat, creating an abundance of cargo space behind the front seat, just like a minivan. Sliding doors on both driver and passenger sides of the vehicle, just like those on a minivan, provide easy access to second- and third-row seating and, in combination with a liftgate at the rear, make for easy loading of whatever one might wish to transport.

“How is it not a minivan?” one of the assembled journalists asked after the presentation.

“It's a smaller package,” said Tim Stoehr, Ford's commercial truck marketing manager.

The journalist pointed out that the subcompact Mazda5 is called a minivan.

“They can call it whatever they want,” said Mr. Stoehr.

In truth, Mazda avoids the supposedly offensive minivan moniker as well, saying that the “Mazda5 refuses to be categorized.” Both automakers perhaps believe that consumers find the M-word so offensive that applying it to a product would be suicidal. They could be right.

While the Transit Connect Wagon is clearly a minivan with a high roof, unlike other seven-passenger minivans available in the United States it is expected to deliver at least 30 m.p.g. on the highway. E.P.A. fuel-economy estimates are not yet available.

Engine choices will include Ford's 1.6 liter EcoBoost turbocharged 4-cylinder and a naturally aspirated 2.5-liter. No engine specs were provided, but in the Ford Fusion the 1.6-liter EcoBoost delivers 178 horsepower, while the 2.5-liter generates 175 horsepower - with the turbocharged EcoBoost having a stouter torque curve and slightly better fuel economy.

Mike Levine, a Ford spokesman, said the cargo space of the long-wheelbase model with both second- and third-row seats folded was over 100 cubic feet. That makes it only slightly less cargo-capable than the Nissan Quest, which measures 108.4 cubic feet. The maximum cargo area of Chrysler's Town and Country minivan is 143.8 cubic feet.

The Transit Connect provides ample legroom for all passe ngers, even those in the third row. The third-row seat has 5 inches of adjustment built in, and when slid all the way forward, 19.8 cubic feet of cargo space is available behind the seat.

Several trim levels will be offered, and options will include leather seating surfaces, a touch-screen display, a rear-view camera, the MyFord Touch communication and entertainment system, and a full-glass panoramic roof.

Mr. Stoehr said no production estimates were available, but the mix is expected to be 80 percent long-wheelbase and 20 percent short-wheelbase models. The vehicle will be built in Ford's plant in Valencia, Spain. That plant builds a number of vehicles on Ford's C1 subcompact platform, so according to Mr. Stoehr, production is flexible and the mix can be adjusted to meet demand.

The Transit Connect Wagon is expected to arrive at Ford dealerships in late 2013. No pricing information is available at this time.

Ford Motor In the longer-wheelbase version, Transit Connect seats seven people.

Aftermarket Industry Showing Renewed Strength

Jerry Garrett This year's SEMA show in Las Vegas set an attendance record

LAS VEGAS - The aftermarket automobile accessories industry is showing more strength than it has since the most recent recession, judging from the Specialty Equipment Market Association trade show that concluded earlier this month at the convention center here.

The sprawling show, which has a footprint of more than 2.5 million square feet, was the biggest in its 45-year history - attracting a record 135,000 overall attendees, including 60,000 buyers and 3,000 media members, according to Della Domingo, a SEMA spokeswoman.

“Our industry generated $29.8 billion dollars of retail sales in 201 1,” said Peter MacGillivray, a SEMA vice president. “We're optimistic about 2012, we're projecting as much as 4 percent growth this year. And that is just in the United States. We are also experiencing explosive new growth in China, the Middle East and other developing countries.”

The industry's heyday was 2007, when United States sales topped $34 billion, Mr. MacGillivray said. Sales dropped drastically in 2008 and 2009, then started a long, slow climb.

“We are not quite back up to pre-2008 levels,” Mr. MacGillvray said, “We are still in recovery mode, but where we are as an industry right now is an indication of how far we've come since everything bottomed out.”

Organizers had high hopes for this year's SEMA show, but worries crept in that attendance might suffer from flight cancellations and weather delays caused by Hurricane Sandy.

“We're relieved that it didn't have much of an impact,” Mr. Ma cGillivray said. “This show is so important to the small businesses, they'll do just about anything to get here.”

He added that less than 10 percent of the exhibitors and attendees were from the northeastern part of the United States, where the storm hit the hardest. And many of those attending from that part of the country had departed before the storm hit.

“Despite the storm, it was an amazing year for the SEMA show,” Ms. Domingo said in an email. “The highest number of exhibitors and attendees in all show history.”

The SEMA show, which specializes in aftermarket parts and custom accessories for the transportation industry, is divided into 12 sections: business services; collision repair and refinish; a global tire expo; Hot Rod Alley; mobile electronics and technology; powersports and utility vehicles; racing and performance; the restoration marketplace; restyling and car care accessories; tools and equipment; trucks, SUVs and off-road; and w heels and accessories. This year, many automobile manufacturers - Ford, General Motors, Chrysler, Toyota, Hyundai and Honda among them - had especially large displays of customized vehicles.

Although the show itself is closed to the general public, this year it expanded from inside the convention center into adjacent parking lots for publicly viewable ride-and-drive demonstrations and a Global Rally Cross racing competition. After the show, the public was invited to the SEMA Cruise, a recent addition, in which all the show's thousands of cars are invited to parade out of the convention center and through Las Vegas streets.

The first SEMA show, which was little more than an informal swap meet and flea market, was held at Dodger Stadium in Los Angeles in 1967. The following year it was moved to the convention center in Anaheim, Calif., where it stayed for nine years, until Leo Kagen, one of the founding members of the association, relocated it to Las Vegas in 1977.

“Everybody said I was crazy to move it, because it was really doing well in California,” Mr. Kagen, 96, said in an interview last month, after it was announced that a SEMA scholarship to encourage women to train as automotive re-stylists had been established in his name. “I guess I have the last laugh now!”

SEMA recently signed a contract extension to continue holding the show at the Las Vegas Convention Center through 2017.

Wheelies: The Going Forward Edition

General Motors Test Track presented by Chevrolet is scheduled to open at Epcot on Dec. 6

In which we bring you motoring news from around the Web:

- The revamped Test Track at Epcot Center in Orlando, Fla., is scheduled to reopen on Dec. 6, and General Motors and Walt Disney World are promising that visitors will have an opportunity to design their own vehicles, using computers similar to those used by G.M. designers, according to The Orlando Business Journal. Then visitors will get a chance to test their vehicle designs during the ride. “The reimagined Test Track portrays an optimistic view of the future and reflects the deep collaboration between Disney and Chevrolet on both the design and the overall experience,” Eric Jacobson, senior vice president, Walt Disney Imagineering, said in a statement. “It's a thrilling attraction supported by rich exhibit displays and interactive elements that bring guests directly into the design process â€" with a few surprises thrown in.” (Orlando Business Journal)

- Chrysler‘s iconic 2011 Super Bowl commercial that featured Eminem in a tribute to Detroit was the beginning of a beautiful friendship between Chrysler and Selected of God, a Detroit gospel choir that appeared in the ad, according to The Detroit Free Press. The choir, which is releasing its third album, has maintained a relationship with the automaker since the commercial was produced. The choir has performed at Chrysler-sponsored events, and the company paid to produce a video, “Lose Yourself,” that is available on YouTube but will not be used in an advertisement. Meanwhile, the choir has seen its appea rances grow from about six a year to 60. (The Detroit Free Press)

- At the Volkswagen Group of America headquarters in Herndon, Va., the employee parking lot is filled with Volkswagens and Audis, and that's no accident, The Washington Post reports. Volkswagen offers its employees a deal on leasing new vehicles that is hard to pass up. Every six to 12 months, employees and their families can lease a new Volkswagen or Audi vehicle for a cost equal to 1.5 percent of the retail price. The company pays for the vehicle registration, maintenance expenses and car insurance. And lease payments are deducted from the employees' paycheck, making it a cinch to keep up with the bills. Each worker and family - spouse, children, parents and spouse's parents - can lease up to four cars at a time through the program. (The Washington Post)

General Motors

Honda Previews a Facelift for the 2013 Civic Before Debut in Los Angeles

American Honda The restyled 2013 Honda Civic sedan.

When Honda unveiled the slightly refreshed ninth-generation Civic at the Detroit auto show last year, the car was somewhat underwhelming. The Civic looked dated, and many reviews in the media have not been kind, with some saying that the car has lost the personality that made it fun. Consumer Reports even left it off its list of recommended cars.

So Honda, acutely aware of how important the Civic is to its bottom line, is taking another shot at perking the car up, at least cosmetically, with a midcycle refresh of its refresh. In its news release on Monday, the company said it was giving the 2013 car a more youthful style. A new fron t bumper headlines the update with a sporty looking mesh grille, chrome accents and integrated fog lights on upper trims.

The amber corner lights are replaced with classier looking clear units, and the hood gets some aggressive lines. A new rear bumper and trunk lid help get rid of the 2001 Toyota Camry look, and the taillights now extend onto the trunk lid. Reflectors are integrated into the new bumper, and a number of new wheels will be added to the option sheet.

Honda also says it is adding safety, comfort and chassis improvements, though Chris Naughton, a company spokesman, said in a telephone interview that he could not provide further details. He also wouldn't say whether any powertrain updates were coming. All of the questions will presumably be answered when Honda unveils the sedan on Nov. 29 at the Los Angeles auto show.

American Honda The 2013 Honda Civic sedan has a new rear bumper and trunk lid.