The Job Openings and Labor Turnover Survey (JOLTS) released today by the Bureau of Labor Statistics showed job openings falling by 118,000 in April to 3.8 million. Job openings have improved very little over the last year and remain very depressed. In 2007, there were 4.5 million job openings each month, so April’s level of 3.8 million is more than 16 percent below its prerecession level.
The job openings data are extremely useful for diagnosing what’s behind our sustained high unemployment. In today’s economy, unemployed workers far outnumber job openings in every sector, as shown in Figure A. This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—and not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.
In particular, there have recently been stories (for example, here) of worker shortages in construction. While there may be some construction firms in some places that cannot find the workers they need, the data show that this is in no way a prevalent phenomenon—unemployed construction workers outnumber job openings in construction by nearly 12-to-1. In construction as well as in every major industry, it is work that our labor market lacks, not the right workers.
Hires increased in April by almost 200,000 to 4.4 million, but this was just a partial reversal of a drop in March. Hires are no higher than they were last spring and remain nearly 15 percent below their average 2007 level.
Layoffs held roughly steady in April (-33,000). Layoffs are not currently the primary concern in the labor market, having been at prerecession levels since early 2011 (at around 1.7 million layoffs per month). However, given the lack of hiring, the consequences for workers of being laid off are far worse now than before the recession began; workers are far less likely to find a new job within a reasonable timeframe, particularly one that pays as much as the job they lost.
Voluntary quits increased by 152,000 in April. More voluntary quits generally signals good news in the labor market, since it means workers are seeing stronger outside job opportunities. However, April’s increase was just a partial reversal of a drop in March. Voluntary quits are still very depressed, at 22 percent below their 2007 level.
In April, the number of job seekers, which fell by 83,000 from March, stood at 11.7 million (unemployment data are from the Current Population Survey and can be found here). However, given the drop in job openings, the “job-seekers ratio”—the ratio of unemployed workers to job openings— increased in April to 3.1-to-1 from a revised 3.0-to-1 in March.
As shown in Figure B, the job-seekers ratio has improved fairly steadily since reaching its peak of 6.7-to-1 in July 2009. Despite this improvement, odds remain stacked against job seekers; the ratio has been 3.0 -to-1 or greater since October 2008, four-and-a-half years ago. A job-seekers ratio above 3-to-1 means there are no jobs for more than two out of three unemployed workers. To put today’s ratio of 3.1-to-1 in perspective, it is useful to note that the highest the ratio ever got in the early 2000s downturn was 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).
— With research assistance from Natalie Sabadish and Hilary Wething.