|WACO, October 8 - There are now more job openings in the United States than at any point since January 2001. Across the country, there were 4.8 million open positions (according to the Bureau of Labor Statistics—BLS) as of the end of August.
That figure is almost a million higher than in August of last year, and the fact that there is work out there is good news. The recovery has been frustratingly slow to generate new jobs, and long-term unemployment is clearly a major problem.
Of the 4.8 million total job openings, almost 4.4 million of them are private-sector jobs. The education and health services industry had the most openings, with 886,000 (the vast majority of them in health services). Next was professional and business services, with 879,000 positions available. Trade, transportation, and utilities followed with 836,000 openings, some 513,000 of them in retail trade. Unfortunately, the JOLT (Job Openings and Labor Turnover) data from BLS is not available at a state or local level, just four huge regions which aren’t all that helpful. Texas is in the South Region along with 16 other states and D.C., where there are almost 1.9 million openings.
As noted, it was January 2001 when the number of available positions was this high. Openings dropped sharply after that point, with the recession of the early 2000s, hitting a trough of 3.1 million in March 2003. Available positions trended upward before peaking in 2007 in the 4.6 million range. At the depths of the most recent recession (July 2009), only 2.1 million job openings were reported. Job openings fall when the economy shrinks and rise as it recovers, and that is certainly going on now.
There is, however, a problem lurking in these statistics. In September, the US economy added 248,000 jobs, a monthly rate slightly higher than the pace of about 213,000 per month through the prior year. Even with these job gains, the number of unemployed persons stood at 9.3 million. The number of people employed part time for economic reasons (meaning that they would rather have a full-time job) was 7.1 million. Millions more Americans were marginally attached to the labor force and wanted work and had looked for a job in the past year (just not in the past four weeks as required to be officially counted as “unemployed”). Why, with these millions of people who want to work, are there still millions of open positions?
Part of the explanation lies in the fact that the pace of hiring is still not back to where it needs to be to work through excess unemployment. In January 2001, there were almost 5.3 job openings, but 5.8 million hires. Hiring dropped through the early 2000s recession, but hit bottom in March 2003 at 4.4 million before trending back upward with the recovery. In the years prior to the most recent recession, monthly hires were coming in at a roughly 5.2-5.4 million pace. The pace of hiring fell to just 3.6 million in the summer of 2009, and has taken years to even approach the prior hiring pace. In August, just over 4.6 million people were hired, a pace well below where we’ve been for most of the past 15 years. Thus, there are job openings, but companies are lagging in decisions to hire.
One challenge is the skill mismatch between the people available for work and the open positions. Some of the corporate and industry restructuring which was required for survival during the downturn has permanently reduced the numbers of certain types of jobs. Others have been on the wane due to technological changes, globalization, or simply the inevitable evolution of the economy. While there are some geographic locations with strong hiring, other parts of the United States are characterized by very weak job markets and high unemployment. So in addition to the skill mismatch, there is a geography mismatch decreasing the efficiency of the labor market.
Another factor is that the economy seems to be adding more high-end and low-end jobs, with relatively fewer in the middle. People who lost these mid-range jobs may find them difficult to replace. I’ve also seen complaints that the extreme slack in the labor market over the past few years has employers seeking almost impossible combinations of attributes at pay that isn’t always commensurate. Adding some weight to this argument is the fact that wages have barely budged during the recovery.
The bottom line is that the number of unemployed persons per job opening has improved dramatically since the recession ended (from almost seven in the summer of 2009 to around two now). There are also more job openings than there have been in a very long time. However, the pace of hiring is too slow to work through the millions of people unemployed any time soon (never mind the millions more who have essentially given up and aren’t actively looking and, thus, are no longer officially counted as “unemployed”).
To solve this problem in a meaningful way will take time as well as retooling and retraining of the workforce. Uncertainty, whether from global tensions or domestic policy questions, will also deter businesses from hiring. Having millions of job openings is a sign of recovery, but we shouldn’t be too hasty to consider the unemployment problem solved.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.