Are There Just Too Many Job Openings?
How crazy it must sound to hear that there are just too many job openings in this strong economy. The U.S. Department of Labor released its Job Openings and Labor Turnover Summary, or the JOLTS, report on Tuesday after last week’s strong Employment Situation report. The U.S. economy keeps adding new jobs via higher payrolls each month, but the Bureau of Labor Statistics (BLS) reported that there were currently 6.9 million job openings in America as of the end of July.
The number of hires was 5.7 million and the number of separations was 5.5 million, respectively, in July. What matters more at the current time from the separations calculations is the so-called quits rate. This came in at 2.4%, versus a rate of just 1.1% for the layoffs and discharges rate. The job openings rate was 4.4%, and the hires rate was 3.8%. The number of quits was 3.6 million, which is generally deemed to be people leaving one job for another job for various reasons.
Last Friday’s BLS report of 3.9% unemployment sounds quite low. That’s because it is. If you add up all the officially unemployed people, the BLS showed that the number was 6.2 million at the end of August. There is a one-month lag on the JOLTS report, but if you make the monthly comparison, the 6.2 million unemployed people is against the 6.94 million job openings.
Companies have raised wages and benefits over the past year, but companies on average are not going into an all-out employment war by stealing away workers from elsewhere by endlessly paying more for to fill those open positions.
It is not always the case that there are more job openings than the number of unemployed people. Many unemployed people may not quite be deemed as prime job candidates for many employers. Other people may be unemployed due to circumstantial reasons and would otherwise be considered prime job candidates. There is also an issue of geography that comes into play, and many are unable or unwilling to relocate for new jobs.
Now think about the reason people quit a job. It might be just for higher pay, or it may be for a better work atmosphere. Maybe the new job is closer to home, or maybe it’s a job with the greatest company or the greatest boss. You can imagine a dozen other reasons someone may quit.
The old rule of thumb is that it is a requirement for people to be willing to quit their current job to have a healthy labor market. And when someone quits at one company, that same position generally needs to be filled. Now the economy just has to figure how to fill in that gap between job openings and the available number of people who can actually fill that job.
On a seasonally adjusted basis, there were more job openings in the South (2.515 million) than any other region. The private job openings were 6.316 million and the number of government job openings were 623,000 at the end of July. The sectors with the largest openings were seen as follows:
- Trade, transport and utilities: 1.307 million
- Education and health services: 1.249 million
- Professional and Business Services: 1.203 million
- Leisure and hospitality: 1.003 million
- Manufacturing: 506,000
- Financial: 378,000
- Construction: 273,000