Job openings hit record high in July

Paul Davidson | USA TODAY

Job openings surged to a record high in July even as hiring fell, signaling a tighter labor market that's expected to soon push up wage growth.

Employers advertised 5.8 million jobs, up from 5.3 million in June and the highest on records dating to 2000, the Labor Department said Wednesday. The previous high was 5.4 million in May.

The report doused a market rally as investors took it as a sign the Federal Reserve could raise interest rates as soon as next week to prepare for an eventual pickup in currently low inflation.

The number of hires, though, slipped to 5 million from 5.2 million, according to the Job Openings and Labor Turnover Survey. As the unemployment rate falls to near-normal levels, many employers are struggling to find workers — a dilemma some economists attribute to mismatches between the skills of unemployed workers and employers' needs.The jobless rate was 5.3% in July and dropped to 5.1% last month.

Many laid off mid-level managers in human resources, marketing and accounting lack the skills in big data analysis and digital marketing, for example, that are required in the modern workplace, says Tom Gimbel, CEO of LaSalle network, a Chicago staffing firm.

The limited pool of job candidates who have those skills are being snapped up more quickly, reducing the average duration of job openings among his clients over the past year to about five weeks from two months.

Chicago-based StratEx, which makes human resources software, has struggled since early June to hire 10 project managers, software developers and customer service representatives, says CEO Adam Ochstein. The company, which typically requires job candidates to undergo five interviews, has lost many to other employers that are pouncing more quickly in the more competitive market.

“It’s biting us in the butt as we go through our due diligence,” he says. He says the firm, with 70 employees, likely could have increased revenue by additional 15% to 20% if it had filled the positions.

Guidant Financial of Bellevue, Wash., which helps small businesses obtain loans, similarly has struggled as long as six months to fill 10 to 15 openings for account executives, technology support representatives and Web designers, says CEO David Nilssen. In response, he says, the company has raised wages by 5% the past 12 months, up from 3.5% the previous year. And it’s now willing to train job candidates who don’t have all the skills it’s seeking.

A big reason hiring has lagged openings is that many employers just recently began ramping up staffing as the economy has picked up, and have been unwilling to raise salaries, says Paul McDonald, senior executive director of staffing firm Robert Half.

“We have to coach them,” he says.

That’s starting to change, he says. The firm predicts overall starting salaries for professionals will rise 4.1% next year, compared to 3.8% in 2015. Growth in average hourly earnings across the economy has remained modest, though it ticked up to 2.2% annually in August from 2% in June, perhaps signaling a coming acceleration.

Labor reported Friday that employers added a solid 245,000 jobs in July, revising up its previous estimate by 30,000.