JOLTS data came out today, and as usual I try to show something different about it each month. Here are hires vs. job openings since the end of the Great Recession:
In the past, there were more hires than job openings. Presumably this means that companies filled lots of jobs from personal recommendations without ever formally opening them.
That changed in 2014 and the number of hires per job opening steadily declined. This trend was interrupted by the pandemic, but afterward the number of job openings skyrocketed while hires remained pretty steady. You remember this period: it was allegedly when COVID had decimated the workforce and businesses were tearing their hair out trying to hire enough people.
But that was never really the case. Now that we have a longer look, it's obvious that hires have been relatively steady for over a decade. What's unusual is that for some reason employers are advertising way more openings than they used to. Why?
There's little evidence that this is because there were genuinely twice as many job openings in 2022 as there were in 2019. The idea is absurd. So why the steady increase in job openings per actual job? And why the huge spike in 2022?
I don't know, but I suspect it has something to do with the way companies hire and is unrelated to skills or labor force retrenchment or anything like that. Skills haven't changed much—certainly not over the course of three years—and labor force participation is normal.
Three possibilities occur to me. The first is that it has something to do with the increasing use of online recruitment and hiring. The second is that HR departments have gotten more forceful about insisting on formal job searches. The third is that there really were more job openings and a large number of them were filled off the books with illegal immigrants.
My guess? It's a little bit of the third but mostly the first. But I don't understand the mechanism. If online hiring is the culprit, how did it change things?
I'd hypothesize that part is due to employers at least contemplating remote work. We used to have whole sets of jobs that we insisted on going to folks living "local" (up to you to decide how long you're willing to commute) and showing up in the office. Now for things like HR and Grants Administration, we'll hire out of state and be 100% remote. Now, whether or not those jobs are getting filled by remote/out of state workers I don't have the statistics, but I imagine we are doing at lot more external advertising than we used to, and not just relying on internal shuffling.
I suggest that reason number 1--increasing use of online recruitment and hiring--likely also includes a subset of similar, but not the same, events--increasing use of in-house staff for recruitment and hiring.
I suspect that after the Covid restrictions eased in 2021, companies that needed to ramp up rapidly realized that they could get good referrals at low cost by pushing, and rewarding, their current employees. I suspect this has happened across the board, from mom-and-pop stores to large commercial and industrial companies.
Some ads may be just salary surveys. Seeing how much bait is required to catch fish.
"labor force participation is normal."
Citation needed! FRED seems to disagree:
https://fred.stlouisfed.org/series/CIVPART
I'm seeing that we dropped our labor force participation rate to 1971 levels during COVID, and by the end of 2021 we got all the way back up to 1977 levels. We're still not recovered to our pre-Covid levels. This seems to be a critical missing piece of your analysis.
I also can't really believe that you're seeing a huge increase in job openings just as vaccines were being rolled out and ruling out changes in the economy due to Covid.
You should be sing prime age labor force participation rates. The data series you're looking at since 2000 primarily reflects the increased number of retirees. Between 2000 and 2015 the number of people over the age of 65 doubled. They typically don't participate in the labor force. Also, a more accurate description of the data is that we are back to the labor force participation rate from 2014-2017 inclusive, despite a much higher rate of retirees.
Why should I be using prime age for this purpose? If a large number of people who were retirement age retired in March of 2020, those are still jobs that need to be filled. Look at the chart - there's clearly a huge covid decline, and we have not recovered to the pre-covid rate
I agree that we won't be getting back to the overall participation rate that we were at in 2005 due to the aging population, but the decline in participation rate since then isn't explained exclusively by the aging population. It's because the economy was understimulated. We were seeing that trend reverse in 2016-2019 as the economy finally reached full employment for the first time since at least 2008 and arguably 1999.
Covid clearly had an impact on the labor force. And not just how many people wanted to work, but what kinds of jobs they wanted. It's crazy to look at that job openings line shoot up at the end of 2020 and say covid had nothing to do with it.
For prime working age the participation rate is now about as high as it has ever been:
https://fred.stlouisfed.org/series/LNS11300060
Nobody is saying the pandemic had no effect, but that effect is now over.
I mean, Kevin is saying the pandemic had no effect. At least, he doesn't list it amongst his possible effects.
But I still don't think you can just ignore people over age 55. That ratio was going up until Covid hit. Why has it still not recovered?
Once again we might be encountering the fact that the baby boom was followed by the baby bust. As a result there are far fewer eligible candidates to hire when boomers retire. Sure there are plenty of people to hire but not people with the years of experience and expertise. I expect this to become a bigger and bigger phenomenon as boomers reach retirement age which is now just beginning.
Just beginning? At least going by the Social Security (62/65/67 actually) and Medicare age of 65 the beginning of the baby boom got there a while back.
One question is whether they are de-duping multiple postings of the same job across different online sites (Indeed, ZipRecruiter, Monster, etc.) which relates to your first point.
As for the third point, I would like to see how those openings breakout by salary level before signing on.
And lastly, how many of these postings are zombie posts which have already been filled but not removed - easy to forget if you are posting on multiple sites as well as your company's internal sites.
This, and also aren't a lot of companies following a policy of posting job listings that they never intend to fill, in order to tell their current employees that they only have to do double duty for a little while longer, new workers are coming in to support them any day now, they just haven't found the right person yet.
automated systems are very efficient at rejecting resumes and some job postings are just honeypots in case the filter identifies a really qualified candidate
in that case you might make room for them even though there's not a 'real' req currently active
in any case, compiling a list of really good people never hurts
It might benefit everyone if you would point to the (V)acancies/(U)nemployed ratio and the Beveridge Curve.
This is a large part is why spouse can't get work. Lots and lots of openings and even a decent number of interviews. Rejection but the openings are still posted months later.
My understanding is there were some regs that made it more profitable to interview more candidates but no hires were needed.
I don't know if this is common outside of the startup/tech world, but in it, everyone is always hiring. Even when they're not.
I've heard several reasons why, pick your favorites:
- Project the image of success
- Collect resumes for later
- Fishing for the mythical 10x programmer
My personal theory is that it is an HR cabal plot to make job searches more dispiriting.
Ghost jobs or Fake job listings are a thing. Companies want to look like they are expanding/growing even when they are not. https://www.cbsnews.com/news/job-openings-fake-listings-ads-federal-reserve-jolts/
It's hard to quantify, but probably does contribute to the problem.