Economic Indicators | Jobs and Unemployment

Ratio of Job Seekers to Job Openings Holds Steady at 2.9-to-1, Equal to the Worst Month of Early 2000s Downturn

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The Job Openings and Labor Turnover Survey (JOLTS) data released this morning by the Bureau of Labor Statistics showed that the total number of job openings increased by 69,000 in September, after a downward revision of 39,000 to earlier data. Taken together, the September level of job openings remained at 3.9 million. However, there were 11.3 million job seekers in September (unemployment data are from the Current Population Survey and can be found here). That means there were 2.9 job seekers for every job opening in September. In other words, for nearly two out of every three job seekers, there simply were no jobs. To put today’s ratio of 2.9-to-1 in perspective, it matches the highest the ratio ever got in the early 2000s downturn (the ratio stood at 2.9-to-1 in September 2003). In a labor market with strong job opportunities, the ratio would be close to 1-to-1, as it was in December 2000 (when it was 1.1-to-1).

Furthermore, the improvement in the ratio of job seekers to job openings in this recovery overstates the improvement in job opportunities. Most of the decline in the number of job seekers is because more than 5 million would-be workers are sidelined; they are neither employed nor looking for work due to the weak labor market. These “missing workers” are thus not counted as unemployed, but many will become job seekers when a robust jobs recovery finally begins, so job openings will be needed for them, too.

Figure A shows the number of unemployed workers and the number of job openings by industry. This figure is extremely useful for diagnosing what’s behind our sustained high unemployment. If our current elevated unemployment were due to skills shortages or mismatches, we would expect to find some sectors where there are more unemployed workers than job openings, and some where there are more job openings than unemployed workers. What we find, however, is that unemployed workers dramatically outnumber job openings across the board. There are between 1.3 and 9.3 times as many unemployed workers as job openings in every industry. In other words, even in the industry with the most favorable ratio of unemployed workers to job openings (finance and insurance), there are still 30 percent more unemployed workers than job openings. In no industry does the number of job openings even come close to the number of people looking for work. This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.

JOLTS

Unemployed and job openings, by industry (in thousands)

Industry Job openings Unemployed
Professional and business services 670.7 1304.9
Health care and social assistance 612.9 877.8
Retail trade 434.3 1279.9
Accommodation and food services 424.6 1177.0
Government 396.0 883.8
Finance and insurance 214.5 275.4
Durable goods manufacturing 162.9 629.9
Other services 147.7 439.2
Wholesale trade 124.2 209.3
Transportation, warehousing, and utilities 131.9 402.7
Information 91.7 184.3
Construction 105.7 987.2
Nondurable goods manufacturing 87.8 425.2
Educational services 62.5 292.4
Real estate and rental and leasing 60.6 150.3
Arts, entertainment, and recreation 55.8 246.9
Mining and logging 19.7 64.3

Note: Because the data are not seasonally adjusted, these are 12-month averages, October 2012–September 2013.

Source: EPI analysis of data from the Job Openings and Labor Turnover Survey and the Current Population Survey

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Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” with which a company can approach a job opening. If companies are trying hard to fill openings, they may, for example, offer strong compensation packages. If they are not trying very hard, they may, conversely, offer meager compensation packages and/or hike up the required qualifications. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical; it tends to be stronger when the labor market is strong and weaker when the labor market is weak. Recruitment intensity is currently very low. This means that when a job opening goes unfilled when the labor market is weak like it is today, it may very well be due to the company holding out for an overly qualified candidate at a very cheap price.

Labor market churn

The JOLTS data are a regular reminder that there is always a great deal of “churn” in the labor market. When we learn, as we did earlier this month, that the labor market added 204,000 jobs in October, it is important to remember that this is a net change, which masks a lot of shuffling. Over the last year, an average of 4.4 million workers were hired every month, and an average of 4.2 million workers either left their jobs voluntarily or were laid off every month. These hires and separations numbers, however, are currently very low; when the labor market is stronger, there is much more churn. For example, in 2006 and 2007, there were 5.3 million people being hired and 5.1 million people separating from their jobs (i.e., leaving their jobs or being fired) each month on average. The reason there is less churn today is that job opportunities are so scarce that employed workers are much less likely to quit the job they have. In 2006 and 2007, nearly 3 million workers voluntarily quit their jobs each month. That dropped to a low of 1.6 million in September 2009. It has since increased somewhat, but is still extremely low. In September, 2.3 million workers voluntarily quit their jobs, a slight decrease (22,000) from August. Because leaving a job for a better opportunity can be an important way for workers to advance, this persistent depressed rate of voluntary quits represents millions of lost opportunities. 

One of the best ways to judge the relative strength of job opportunities over time is to examine the trend in the number of hires. The number of hires increased slightly (26,000) in September. Figure B shows the total number of hires each month over time. It fell dramatically in the Great Recession, saw some modest improvement since the middle of 2009, but is still far below its prerecession level.

JOLTS

Total hires (in thousands), December 2000–September 2013

Month Total hires
Dec-2000 5438
Jan-2001 5790
Feb-2001 5396
Mar-2001 5614
Apr-2001 5386
May-2001 5507
Jun-2001 5116
Jul-2001 5173
Aug-2001 5090
Sep-2001 4937
Oct-2001 5030
Nov-2001 4957
Dec-2001 4771
Jan-2002 4858
Feb-2002 4903
Mar-2002 4637
Apr-2002 4984
May-2002 4997
Jun-2002 4840
Jul-2002 5047
Aug-2002 4845
Sep-2002 4862
Oct-2002 4811
Nov-2002 4893
Dec-2002 4965
Jan-2003 5000
Feb-2003 4676
Mar-2003 4402
Apr-2003 4583
May-2003 4589
Jun-2003 4725
Jul-2003 4616
Aug-2003 4637
Sep-2003 4744
Oct-2003 4896
Nov-2003 4666
Dec-2003 4980
Jan-2004 4819
Feb-2004 4712
Mar-2004 5157
Apr-2004 5131
May-2004 4943
Jun-2004 4991
Jul-2004 4891
Aug-2004 5094
Sep-2004 5057
Oct-2004 5155
Nov-2004 5199
Dec-2004 5190
Jan-2005 5193
Feb-2005 5224
Mar-2005 5210
Apr-2005 5308
May-2005 5320
Jun-2005 5303
Jul-2005 5310
Aug-2005 5443
Sep-2005 5455
Oct-2005 5026
Nov-2005 5232
Dec-2005 5143
Jan-2006 5194
Feb-2006 5377
Mar-2006 5363
Apr-2006 5096
May-2006 5532
Jun-2006 5357
Jul-2006 5419
Aug-2006 5222
Sep-2006 5237
Oct-2006 5187
Nov-2006 5540
Dec-2006 5261
Jan-2007 5279
Feb-2007 5183
Mar-2007 5354
Apr-2007 5180
May-2007 5314
Jun-2007 5237
Jul-2007 5121
Aug-2007 5145
Sep-2007 5156
Oct-2007 5201
Nov-2007 5150
Dec-2007 4971
Jan-2008 4927
Feb-2008 4895
Mar-2008 4811
Apr-2008 4897
May-2008 4678
Jun-2008 4739
Jul-2008 4505
Aug-2008 4609
Sep-2008 4378
Oct-2008 4509
Nov-2008 3960
Dec-2008 4182
Jan-2009 4202
Feb-2009 4008
Mar-2009 3784
Apr-2009 3887
May-2009 3792
Jun-2009 3626
Jul-2009 3840
Aug-2009 3789
Sep-2009 3878
Oct-2009 3792
Nov-2009 3960
Dec-2009 3829
Jan-2010 3882
Feb-2010 3822
Mar-2010 4186
Apr-2010 4098
May-2010 4378
Jun-2010 4026
Jul-2010 4090
Aug-2010 3911
Sep-2010 3946
Oct-2010 4073
Nov-2010 4100
Dec-2010 4125
Jan-2011 3939
Feb-2011 4052
Mar-2011 4203
Apr-2011 4036
May-2011 4107
Jun-2011 4142
Jul-2011 4077
Aug-2011 4187
Sep-2011 4304
Oct-2011 4159
Nov-2011 4264
Dec-2011 4174
Jan-2012 4192
Feb-2012 4489
Mar-2012 4435
Apr-2012 4252
May-2012 4526
Jun-2012 4357
Jul-2012 4171
Aug-2012 4405
Sep-2012 4217
Oct-2012 4287
Nov-2012 4420
Dec-2012 4195
Jan-2013 4298
Feb-2013 4451
Mar-2013 4227
Apr-2013 4395
May-2013 4490
Jun-2013 4318
Jul-2013 4497
Aug-2013 4559
Sep-2013 4585

Note: Shaded areas denote recessions.

Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey public data series

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— With research assistance from Hilary Wething and Will Kimball

See more work by Elise Gould