Job openings were very high in the second half of 2022, and although levels have declined since then, they remain high compared to the past 20 years. But why did job openings soar after the pandemic recession? And what does that tell us?
We will introduce some useful basic data. fred’s website It is operated by the Federal Reserve Bank of St. Louis. The blue line shows the number of job openings as a percentage of the total existing workforce. The red line (to which we will return later) shows the rate at which workers quit their jobs (i.e., voluntarily quit) as a percentage of the labor force.Data is monthly Recruitment/turnover rate survey Conducted by the U.S. Bureau of Labor Statistics.
Simon Mongay and Jeff Horwich of the Federal Reserve Bank of Minneapolis describe these patterns as follows:Are job openings still as plentiful as they appear? Impact on “soft landing”” The subtitle is „U.S. jobs data is disconnected from other indicators, complicating the outlook for the labor market“ (December 1, 2023).
Mongay and Horwich say the post-pandemic surge in job openings (or „job openings,“ as they also call them) is helping businesses bounce back, even with the worst of the pandemic in the rearview mirror. It suggests that it represents the employer. , Hiring workers has proven difficult due to low unemployment rates, and the recent drop in job openings may be due to employers giving up on hiring more people and moving to other business strategies. It represents that.
However, the authors also point out that the job offer rate has been changing in a way that is not reflected in the turnover rate statistics. The graph above shows that although the percentage of people leaving their jobs in 2022 will certainly rise (this phenomenon is sometimes exaggeratedly referred to as „the Great Retirement“), the rate of increase will not be as rapid as the increase in the number of job openings. It shows that there is no. . So why are there so many job openings? One of the possibilities they suggest is:
We do not take a position here on the causes of this change in vacancy data. However, he said one trend to consider is that digital technology has dramatically changed the cost for employers to post jobs, hire, and evaluate candidates. These changes may have contributed to the steady increase in the measured number of vacancies over time.
In other words, it’s now much easier and cheaper for employers to list job openings and narrow down the initial responses they receive. Employers may then either move forward with hiring or wait.
The authors present the behind-the-scenes calculations for this increase in recruitment rates. Essentially, they looked at how other labor market factors correlated with the job offer rate before the pandemic and extrapolated what would happen based on those factors. There is. The job opening rate would have been if the previous correlation had continued unchanged. This “adjusted” job offer rate is much lower. The authors therefore argue that the employment outlook is not as good as the rising job offer rate suggests. Additionally, they point out that the unemployment rate is slowly rising („the unemployment rate increased modestly from 3.4 percent in April to 3.9 percent in October“), and that further declines in the job openings rate are unlikely. It has been suggested that this may be accompanied by an increase in the unemployment rate. .