Economic Indicators | Jobs and Unemployment

A lack of want ads: the job market deteriorates

Today’s Bureau of Labor Statistics’ April report from the Job Openings and Labor Turnover Survey (JOLTS) shows that the number of job openings decreased by 151,000 in April.  Most of the job openings were in education and health and professional and business services.

The total number of job openings in April was 3.0 million, and the total number of unemployed workers was 13.7 million (unemployment is from the Current Population Survey).  As a result, the ratio of unemployed workers to job openings was 4.6-to-1 in April, a deterioration from the March ratio of 4.3-to-1.  April marks two years and four months that the “job seekers ratio” has been substantially above 4-to-1.  A job seekers ratio of 4-to-1 means that for 3 out of 4 unemployed workers, there simply are no jobs.   The highest this ratio ever got in the early 2000s downturn was 2.8-to-1 in the middle of 2003. 

The weak jobs report released June 3rd showed that despite payroll job growth over the last year, the labor force (i.e., the employed plus those jobless workers who are actively seeking work) is still smaller than it was before the recession started (by around a quarter million), though the working-age population has grown by 6.9 million workers since then.  If the labor force participation rate had held steady over the downturn, there would be millions more workers in the labor force right now, but instead those would-be workers are on the sidelines.  Some commentators have expressed surprise that these missing workers have not yet begun to enter or reenter the labor market in large numbers, given that the labor market has now been adding jobs for over a year and the job-seekers ratio has improved substantially.  What they are overlooking is the profound lack of opportunities job seekers still face. 

First, it is useful to note that layoffs are back down to pre-recession levels.  Workers with a job today are no more likely to face a layoff than they were before the recession started—in fact, workers today are a little bit less likely to face a layoff than they were before the recession started.  In 2006, the layoff rate (layoffs as a percent of total employment) averaged 1.3%, whereas in the first four months of 2011, it averaged 1.2%.   

Hiring, on the other hand, remains abysmal.  The average number of hires per month in the first four months of 2011 is 27% below the average number of hires per month in 2006, though there are nearly twice as many unemployed workers.*  In other words, for job seekers, the labor market remains bleak.  As long as openings remain low—still worse than the worst of the 2001 recession—workers will continue to be sidelined. 

*We use 2006 for the comparison here because, though the recession officially began in December 2007, 2006 was the annual low for layoffs and the annual high for hiring.

—Research assistance provided by Kathryn Edwards and Nicholas Finio. 

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