US / 2.9 job seekers for every job opening, first time in nearly five years the ratio fell below 3.0

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 75,000 in August. That, along with the upward revision of 119,000 job openings to earlier data, brought the August level of job openings to 3.9 million. However, there were 11.3 million job seekers in August (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 August. In other words, for nearly two out of every three job seekers, there simply were no jobs.

August was the first time in nearly five years that the ratio of job seekers to job openings fell below 3.0-to-1, but the level is still extremely high. 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 9.8 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.

Chosen excerpts by Job Market Monitor. Read the whole story at 

via Ratio of Job Seekers to Job Openings Slips Below 3-to-1 for First Time in Nearly Five Years, but Is Still as High as in Worst Month of Early 2000s Downturn | Economic Policy Institute.