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Updated: 55 min 56 sec ago

Who's quitting? Who's hiring? Is it you?

Tue, 2014-04-08 13:12

There are some good things in the JOLTS (Job Openings and Labor Turnover Survey).  There were 4.2 million new job postings in February, 300,000 more than in January. We're at January 2008 levels now.

But let’s have our fresh numbers with a side of pickled context shall we?

First, these are mostly low wage jobs: restaurant jobs, temp jobs, for example.  This is typical of any  post-recession recovery; these are the jobs that rebound first.  We may not like them, but at least they’re rebounding. Second, we still have 2.5 times as many people as job postings.  That means 60 percent of people looking for a job in February weren't going to get hired no matter what they did.  In this kind of environment, employers have little incentive to bid up wages.

If employers aren’t bidding up wages and there aren’t nearly enough jobs to go around, then, thirdly, people aren’t going to really feel very comfortable with their job prospects.  Which is reflected in the Quits Rate – that’s the number of job quits/total employment.  It’s low, at *1.9 percent and it hasn’t really changed meaningfully in three years. 

Finally, job postings don’t mean job hirings.  Employers appear to be taking their time filling these positions.  That’s why the Hires Rate (number of hires during the entire month as a percent of total employment) is still depressed at 3.3 percent. But let’s not get all doom and gloom here.  Things are improving without a doubt.  They’re just doing so very slowly.

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CORRECTION: An earlier version of this story incorrectly reported the quits and hires rates in the Labor Department's February report. The text has been corrected.

Burning down the house that Levi's built

Tue, 2014-04-08 12:41

Josh Gustin took a different path after getting his MBA from the University of California Berkeley 8 years ago.

“Everyone else was going into consulting and banking, and I wanted to teach myself how to make the perfect pair of jeans,” Gustin said.

He started the company Gustin Jeans, and he quickly learned that making his way in the $6 billion world of denim would require some hoop-jumping.

“The basic model of never knowing what consumers want to buy is the fundamental flaw in this model. I would basically sit here and say ‘What would [the customer] want to wear a year from now?’ And then I’d place a big bet on fabric, sew all these jeans, put them in a warehouse and then spend the next 12 months convincing you that is indeed what you wanted to wear. And that just doesn’t work. It’s crazy.”

That guessing game means higher risk for companies and retailers, and higher prices for customers. Josh sold his jeans wholesale for $81 and the stores would hike the price up to $250. Gustin explained how this worked to his friend and eventual business partner, Stephen Powell, and the two decided almost exactly a year ago to cut the retail cord.

But selling stuff on the Gustin website only solved part of the problem. What they really needed was a way to precisely calculate supply and demand, the retail industry’s most vexing problem. That’s when they looked to Kickstarter.

“We are the first fully crowd-sourced fashion company,” Gustin said.

Here’s how it works: Gustin and Powell post a photo of a fabric swatch on their website with a brief description of what they plan to do with it. They sell jeans, shirts, bags, wallets, all kinds of menswear. Customers can then bid on “campaigns” they like, committing to buy an item for the price listed if enough interest is shown. Josh says just about everything Gustin posts makes it to production. Some of the items ‘sell out’ in just a few days, and that’s all before a single one is even made.

The result? Gustin Jeans now sell for wholesale straight to customers, operates exclusively in the black, and customers don’t have to wait until next season for new designs.

“Since we don’t have to take big risk on a particular type of fabric, we can offer a lot more variety. So we’ve probably used over a hundred different denims in less than a year. That’s probably what another fashion brand would use in a decade. We line up supply and demand every single time, and this is something fashion never does.”

 Even though it’s working well for them, Gustin isn’t expecting competitors to flood the markets any time soon.

“We benefit a little bit from how old this industry is. A lot of fashion companies are used to working a certain way, and either they’re too wedded to the traditional retail model – they can’t walk away from hundreds and hundreds of stores, that’s too scary – or they just don’t get it. They say, ‘No, we’ve always done business this way, why would we change?’” 

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