June 8, 2021

The  Labor Department reported that job openings rose t998 thousand of 12.0% in April to a record high level of 9,286 thousand after rising 762 thousand or 10.1% in March  .  The BLS reports that the largest increases in openings were in accommodation and food services (+349 thousand), other services (+115 thousand), and arts, and durable goods manufacturing (+78 thousand).  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 state and federal unemployment benefits, some of those unemployed workers are choosing not to work until their benefits run out.  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 1.1 unemployed workers for every available job.  Prior to the recession this rate was steady at about  0.8.  Thus, the labor market continues to improve, but it is still not back to its pre-recession degree of tightness.

The Labor Department also provides information on hires each month.  Hires rose 69 thousand or 1.1% in April to 6,075 thousand after increasing 212 thousand or 3.7% in March.  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 steady at 4.2 in March.  The rate of job openings was 6.0.  Thus, job openings were 27.6% higher than hires which suggests that employment should continue to climb in the months ahead.  Prior to the recession job openings were  15-20% 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 unemployment benefits for as long as they can.

Stephen Slifer

NumberNomics

Charleston, SC