Labor Market Continues to Tighten
The number of job openings at private sector (non-governmental) employers hit a new high of 5.4 million in July, according to data released this morning by the Bureau of Labor Statistics. There were about 1 million more openings than the previous peak in 2007.
As a percentage of employment, the openings rate now stands at 4.2 percent, matching highs from earlier in 2016 and 2015, and well above the peak of 3.6 percent hit during the previous expansion (Chart 1).
When it comes to filling those jobs, the challenge is getting more difficult from an employer’s perspective. The pool of available workers — the sum of unemployed people currently looking for work plus people who want a job but haven’t looked in the past 30 days — has fallen to 13.7 million. That’s down from the peak of 21.2 million, just after the end of the Great Recession.
That translates to about 2.33 available workers for every job opening, the lowest number of available workers per opening since 2001 (Chart 2).
Add in the fact there are often regional and skill-set mismatches between job openings and available workers, and these data suggest the labor market may be quite tight. This would also suggest support for better wage growth, as employers bid up wages to lure the best candidates to fill open jobs.
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Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
