September 8, 2021
The Labor Department reported that job openings rose 749 thousand or 7.4% in July to 10,934 thousand which is a record high level. This is the seventh consecutive increase in the number of job openings. 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 more job openings than there are unemployed workers. Specifically, there are 0.8 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 continues to improve and it is now back to its pre-recession degree of tightness.
The Labor Department also provides information on hires each month. Hires fell 160 thousand in July to 6,667 thousand after jumping 805 thousand or 13.4% in July. 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 slipped by 0.2 in July to 4.5 in July. The rate of job openings was 6.9. Thus, job openings were 53.3% 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.