November 12, 2021

The  Labor Department reported that job openings fell 159 thousand or 1.8% in September to 10,498 9 thousand after falling 469 thousand in August.  Openings reached a record high level of 11,098 thousand in July.  With as many job openings as there are, it is surprising that more workers are not being hired.  It could be that the available workers do not have the skills required for the jobs that are available.  Or, perhaps, between their unemployment benefits, generous child welfare payments and rent relief, that some of those unemployed workers are choosing not to work.  Having said that, as more and more businesses reopen and the corona virus gets under better control from the vaccines,  the economic expansion will gather momentum, the number of job openings will continue to climb, and the unemployment rate will steadily decline.

As shown in the chart below, there are currently more job openings than there are unemployed workers.  Specifically, there are 0.7 unemployed workers for every available job.  Prior to the recession this rate was steady at about  0.8.  Thus, by this measure the labor market is now back to its pre-recession degree of tightness.

The Labor Department also provides information on hires each month.  Hires fell 38 thousand in September to 6,459 thousand after having declined 264 thousand in August.  The pace of hiring is going to accelerate quickly in the months ahead as COVID increasingly gets under control, federal unemployment benefits cease, and the economy continues to open up..

Thus, the rate of hiring was unchanged in September at 4.4.  The rate of job openings declined 0.1 to 6.6.  Thus, job openings were 50.0% higher than hires which suggests that employment should continue to climb in the months ahead.  Prior to the recession job openings were  15% higher than hires which was a reflection of the very tight labor market that existed at that time.  Unemployed workers today do not seem to have the skills required by employers, are afraid to work for fear of catching COVID and bringing it home to their families, are unable to find affordable day care, and/or are willing to live off generous government benefits for as long as they can.

But workers are unafraid to quit their job.  They know they can easily find another one.  The quit rate climbed in September to 3.0 which is a record high level for this series and another clear indication that the labor market is very tight and workers remain in the driver’s seat.

Stephen Slifer

NumberNomics

Charleston, SC