August 30, 2022
The Labor Department reported that job openings surprisingly rose 199 thousand in July to 11,239 thousand after having declined 263 thousand in June. With higher inflation triggering a series of Fed rate hikes the economy is beginning to slow. GDP declined 1.6% in the first quarter and was followed by 0.6% in the second quarter. While the pace of economic activity has slowed sharply, the job market has softened only slightly.
As shown in the chart below, there are currently more job openings than there are unemployed workers. Specifically, there are 2.0 jobs available for every unemployed worker. Prior to the recession this rate was steady at about 1.2. Thus, the demand for labor still far exceeds the supply.
The Labor Department also provides information on hires each month. Hires declined by 74 thousand in July after falling by 51 thousand in June .
The rate of hiring was unchanged in June at 4.2. The rate of job openings rose 0.1 to 6.9 Thus, job openings were 64.3% higher than hires which suggests that employment should continue to climb rapidly 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, have chosen to become gig workers and go into business for themselves, 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.
The quit rate was fell 0.1 in July to 2.7 after having been unchanged in June The willingness to quit one’s job has backtracked slightly in recent months as workers concern about a recession occurring in the not-too-far-distant future makes them want to hang onto the job that they have.