The Job Openings and Labor Turnover Survey (JOLTS) data released this morning by the Bureau of Labor Statistics showed that the total number of job openings increased by 69,000 in September, after a downward revision of 39,000 to earlier data. Taken together, the September level of job openings remained at 3.9 million. However, there were 11.3 million job seekers in September (unemployment data are from the Current Population Survey and can be found here). That means there were 2.9 job seekers for every job opening in September. In other words, for nearly two out of every three job seekers, there simply were no jobs. To put today’s ratio of 2.9-to-1 in perspective, it matches the highest the ratio ever got in the early 2000s downturn (the ratio stood at 2.9-to-1 in September 2003). In a labor market with strong job opportunities, the ratio would be close to 1-to-1, as it was in December 2000 (when it was 1.1-to-1).

Furthermore, the improvement in the ratio of job seekers to job openings in this recovery overstates the improvement in job opportunities. Most of the decline in the number of job seekers is because more than 5 million would-be workers are sidelined; they are neither employed nor looking for work due to the weak labor market. These “missing workers” are thus not counted as unemployed, but many will become job seekers when a robust jobs recovery finally begins, so job openings will be needed for them, too.

Figure A shows the number of unemployed workers and the number of job openings by industry. This figure is extremely useful for diagnosing what’s behind our sustained high unemployment. If our current elevated unemployment were due to skills shortages or mismatches, we would expect to find some sectors where there are more unemployed workers than job openings, and some where there are more job openings than unemployed workers. What we find, however, is that unemployed workers dramatically outnumber job openings across the board. There are between 1.3 and 9.3 times as many unemployed workers as job openings in every industry. In other words, even in the industry with the most favorable ratio of unemployed workers to job openings (finance and insurance), there are still 30 percent more unemployed workers than job openings. In no industry does the number of job openings even come close to the number of people looking for work. This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.

JOLTS Unemployed and job openings, by industry (in thousands) Industry Job openings Unemployed Professional and business services 670.7 1304.9 Health care and social assistance 612.9 877.8 Retail trade 434.3 1279.9 Accommodation and food services 424.6 1177.0 Government 396.0 883.8 Finance and insurance 214.5 275.4 Durable goods manufacturing 162.9 629.9 Other services 147.7 439.2 Wholesale trade 124.2 209.3 Transportation, warehousing, and utilities 131.9 402.7 Information 91.7 184.3 Construction 105.7 987.2 Nondurable goods manufacturing 87.8 425.2 Educational services 62.5 292.4 Real estate and rental and leasing 60.6 150.3 Arts, entertainment, and recreation 55.8 246.9 Mining and logging 19.7 64.3 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: Because the data are not seasonally adjusted, these are 12-month averages, October 2012–September 2013. Source: EPI analysis of data from the Job Openings and Labor Turnover Survey and the Current Population Survey Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” with which a company can approach a job opening. If companies are trying hard to fill openings, they may, for example, offer strong compensation packages. If they are not trying very hard, they may, conversely, offer meager compensation packages and/or hike up the required qualifications. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical; it tends to be stronger when the labor market is strong and weaker when the labor market is weak. Recruitment intensity is currently very low. This means that when a job opening goes unfilled when the labor market is weak like it is today, it may very well be due to the company holding out for an overly qualified candidate at a very cheap price.

Labor market churn

The JOLTS data are a regular reminder that there is always a great deal of “churn” in the labor market. When we learn, as we did earlier this month, that the labor market added 204,000 jobs in October, it is important to remember that this is a net change, which masks a lot of shuffling. Over the last year, an average of 4.4 million workers were hired every month, and an average of 4.2 million workers either left their jobs voluntarily or were laid off every month. These hires and separations numbers, however, are currently very low; when the labor market is stronger, there is much more churn. For example, in 2006 and 2007, there were 5.3 million people being hired and 5.1 million people separating from their jobs (i.e., leaving their jobs or being fired) each month on average. The reason there is less churn today is that job opportunities are so scarce that employed workers are much less likely to quit the job they have. In 2006 and 2007, nearly 3 million workers voluntarily quit their jobs each month. That dropped to a low of 1.6 million in September 2009. It has since increased somewhat, but is still extremely low. In September, 2.3 million workers voluntarily quit their jobs, a slight decrease (22,000) from August. Because leaving a job for a better opportunity can be an important way for workers to advance, this persistent depressed rate of voluntary quits represents millions of lost opportunities.

One of the best ways to judge the relative strength of job opportunities over time is to examine the trend in the number of hires. The number of hires increased slightly (26,000) in September. Figure B shows the total number of hires each month over time. It fell dramatically in the Great Recession, saw some modest improvement since the middle of 2009, but is still far below its prerecession level.

JOLTS Total hires (in thousands), December 2000–September 2013 Month Total hires Dec-2000 5438 Jan-2001 5790 Feb-2001 5396 Mar-2001 5614 Apr-2001 5386 May-2001 5507 Jun-2001 5116 Jul-2001 5173 Aug-2001 5090 Sep-2001 4937 Oct-2001 5030 Nov-2001 4957 Dec-2001 4771 Jan-2002 4858 Feb-2002 4903 Mar-2002 4637 Apr-2002 4984 May-2002 4997 Jun-2002 4840 Jul-2002 5047 Aug-2002 4845 Sep-2002 4862 Oct-2002 4811 Nov-2002 4893 Dec-2002 4965 Jan-2003 5000 Feb-2003 4676 Mar-2003 4402 Apr-2003 4583 May-2003 4589 Jun-2003 4725 Jul-2003 4616 Aug-2003 4637 Sep-2003 4744 Oct-2003 4896 Nov-2003 4666 Dec-2003 4980 Jan-2004 4819 Feb-2004 4712 Mar-2004 5157 Apr-2004 5131 May-2004 4943 Jun-2004 4991 Jul-2004 4891 Aug-2004 5094 Sep-2004 5057 Oct-2004 5155 Nov-2004 5199 Dec-2004 5190 Jan-2005 5193 Feb-2005 5224 Mar-2005 5210 Apr-2005 5308 May-2005 5320 Jun-2005 5303 Jul-2005 5310 Aug-2005 5443 Sep-2005 5455 Oct-2005 5026 Nov-2005 5232 Dec-2005 5143 Jan-2006 5194 Feb-2006 5377 Mar-2006 5363 Apr-2006 5096 May-2006 5532 Jun-2006 5357 Jul-2006 5419 Aug-2006 5222 Sep-2006 5237 Oct-2006 5187 Nov-2006 5540 Dec-2006 5261 Jan-2007 5279 Feb-2007 5183 Mar-2007 5354 Apr-2007 5180 May-2007 5314 Jun-2007 5237 Jul-2007 5121 Aug-2007 5145 Sep-2007 5156 Oct-2007 5201 Nov-2007 5150 Dec-2007 4971 Jan-2008 4927 Feb-2008 4895 Mar-2008 4811 Apr-2008 4897 May-2008 4678 Jun-2008 4739 Jul-2008 4505 Aug-2008 4609 Sep-2008 4378 Oct-2008 4509 Nov-2008 3960 Dec-2008 4182 Jan-2009 4202 Feb-2009 4008 Mar-2009 3784 Apr-2009 3887 May-2009 3792 Jun-2009 3626 Jul-2009 3840 Aug-2009 3789 Sep-2009 3878 Oct-2009 3792 Nov-2009 3960 Dec-2009 3829 Jan-2010 3882 Feb-2010 3822 Mar-2010 4186 Apr-2010 4098 May-2010 4378 Jun-2010 4026 Jul-2010 4090 Aug-2010 3911 Sep-2010 3946 Oct-2010 4073 Nov-2010 4100 Dec-2010 4125 Jan-2011 3939 Feb-2011 4052 Mar-2011 4203 Apr-2011 4036 May-2011 4107 Jun-2011 4142 Jul-2011 4077 Aug-2011 4187 Sep-2011 4304 Oct-2011 4159 Nov-2011 4264 Dec-2011 4174 Jan-2012 4192 Feb-2012 4489 Mar-2012 4435 Apr-2012 4252 May-2012 4526 Jun-2012 4357 Jul-2012 4171 Aug-2012 4405 Sep-2012 4217 Oct-2012 4287 Nov-2012 4420 Dec-2012 4195 Jan-2013 4298 Feb-2013 4451 Mar-2013 4227 Apr-2013 4395 May-2013 4490 Jun-2013 4318 Jul-2013 4497 Aug-2013 4559 Sep-2013 4585 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: Shaded areas denote recessions. Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey public data series Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

— With research assistance from Hilary Wething and Will Kimball