The Job Openings and Labor Turnover Survey (JOLTS) data released this morning by the Bureau of Labor Statistics showed that the hires rate—the share of total employment accounted for by new hires—held steady at 3.3 percent in February. In her analysis, Economic Policy Institute economist Heidi Shierholz argues that the hires rate is one of the best comprehensive measures of the strength of job opportunities. The fact that there has been no sustained improvement in the hires rate for two years shows the continued weakness of today’s labor market.
“This is still a very tough time for people who are out of work through no fault of their own,” said Shierholz. “There are 2.5 times as many job seekers than there are job openings. In normal times that ratio would be closer to 1-to-1. What’s more, this dynamic is holding down wages for people who do have jobs. Employers have no incentive to raise wages since they know they can find many people willing to work for less.”
Many employed workers remain locked in their jobs, unable or unwilling to quit the job they have because other job opportunities remain so scarce. In 2006, nearly 3 million workers voluntarily quit their jobs each month. The number of quits dropped to a low of 1.6 million in August 2009, and is still extremely low relative to before the Great Recession.
Job openings showed more strength in February, increasing by 299,000. This brought the total number of job openings to 4.2 million in February, compared to 10.5 million job seekers. Put another way, job seekers so outnumbered job openings that 60 percent of job seekers were not going to find a job in February no matter what they did.
Furthermore, for the economy to fully recover, there will need to be job openings for the 5.3 million would-be workers who are currently not in the labor market, but who would be if job opportunities were strong.
Lastly, Shierholz points out that today’s labor market weakness is not due to workers lacking the right skills—job seekers outnumber job openings in every industry.