The federal government’s job openings and labor turnover survey data for April, also known as JOLTS, implies that while the labor market has tightened—mostly because of people dropping out of the workforce amid broad demographic and structural economic changes—this is nothing new.
If anything, there is a case to be made that the risks to the economic outlook around a tight labor market are slightly overblown and that, as schools reopen in the fall and firms step up compensation, this perception will ease.
In April, there were roughly 1.06 people for every job opening, down from 1.33 in March and the pandemic peak of 4.99 in April 2020, according to JOLTS data released Tuesday by the Bureau of Labor Statistics and the bureau’s recent household survey of employment for May.
Job openings increased to a record 9.286 million in April, up from 8.12 million in March. The number of people who voluntarily left their jobs increased to 4 million in May, while the quit rate advanced to a high of 2.7%.
This implies a growing confidence among workers that they will find better work elsewhere and may be the source of wage pressures among lower-paid workers in the leisure and hospitality sector.
It is important to note that from January 2018 to February 2020, there was less than one person per job opening, so the fact that there is only one officially unemployed person per job opening is nothing new.
In addition, if one accounts for the labor growth that should have happened during the pandemic, the economy is short well more than 10 million jobs, not the official 7.6 million implied by the data.
With the labor force participation rate standing at 61.6% and the employment-to-population ratio at 58%, the case that there is a significant shortage of workers appears far weaker than is acknowledged and deserves far more scrutiny with respect to the direction of policy than it currently receives.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.