Making Sense of Job Openings and Other Labor Market Measures

The current “supply” of labor gets a lot of attention. That concept refers to the number of people working or looking for work. Our monthly Employment Situation report is where policymakers and the general public learn how that supply has changed. BLS also examines the current “demand” for labor with monthly information on filled jobs and job openings. Readers find those estimate in the BLS Job Openings and Labor Turnover Survey (JOLTS). JOLTS defines job openings as all positions that are open, but not filled, on the last business day of the month. A job is “open” only if it meets all of these conditions:

• A specific position exists and there is work available for that position.
• The job could start within 30 days.
• There is active recruiting for workers from outside the establishment.

There were 9.2 million job openings in May 2021, the same record-high level first reached in April. The May job opening rate also was the same as April’s record high; 6.0 percent of all currently available positions were unfilled. This rate is the number of job openings divided by the sum of current employment plus job openings. You can think of it as a measure of capacity or the rate of current unmet demand for labor.

Editor’s note: Data for this chart are available in the table below.

This spike in openings was sudden by historical standards. It came just one year after an equally sudden drop, which bottomed out in April 2020. In contrast, openings fell more gradually during the 2007–09 recession, then grew even more gradually during the subsequent recovery. The labor market movements during the COVID-19 pandemic have been far more abrupt than those in earlier business cycles.

An abundance of job openings usually signals a “tight” labor market; the demand for labor exceeds the supply at the offered wage. For workers, this may mean it is relatively easy to find a desirable job, assuming they possess the skills employers are seeking. In contrast, employers must compete to hire well-qualified workers.

High unemployment usually signals a “loose” labor market, in which many applicants compete for a limited number of openings; the supply of labor exceeds the demand. Unemployment—the number of workers who lack but seek jobs—stood at 9.5 million in June 2021. That was, down from its pandemic peak of 23 million in April 2020 but still well above its level of less than 6 million before the pandemic. Millions more have left the labor force during the pandemic, and many of them have not returned. These people are not counted as unemployed because they are not actively looking for work. However, we know that 6.4 million of those not in the labor force indicate they want a job now, and 1.6 million say they are not currently searching because of pandemic-related reasons. Some of these people might be willing to consider offers and might add more “looseness” to the labor market.

Comparing the number of job openings to the number of unemployed people provides one measure of the current job market. In May 2021, there was just one unemployed person per job opening—a ratio usually associated with a tight labor market.

Editor’s note: Data for this chart are available in the table below.

So, with openings at an all-time high, and unemployment still elevated, is the labor market tight or loose? The answer is complicated. It also can feel different depending on each worker’s and employer’s circumstances. The answer also differs when you look beyond the national data to uncover differing stories by industry or geography.

As the COVID-19 pandemic subsides and many restaurants and other businesses return to normal operations, some employers are finding it hard to hire enough workers quickly. Some economists are unsure whether recent, temporary increases in the availability and generosity of unemployment insurance have influenced some unemployed workers’ interest in taking jobs. At the same time, the lingering effects of the pandemic probably kept some potential workers from entering or reentering the labor force, especially those with school-aged children whose schools were still closed, and those lacking childcare options. These factors could also affect employers’ ability to hire.

We should also remember that not all job applicants come from the ranks of the unemployed. Many are changing jobs or entering (or reentering) the labor force. The recent abundance of job openings may be increasing workers’ likelihood to change jobs. Just as openings reached a new high in April 2021, so did quits, at 4.0 million. Unlike openings, however, quits edged down a bit in May.

Editor’s note: Data for this chart are available in the table below.

Another factor could be mismatches between the open jobs and the jobseekers. In June 2021, about 15 percent of unemployed people were seeking part-time work. We don’t know how many of the openings were part-time. Since February of this year, the share of unemployed workers who were unemployed 27 weeks or longer has remained above 40 percent, a level last seen in 2012 and roughly twice the 2019 level. Historically, those unemployed longer are slower to connect with new jobs and more likely to stop looking. It is also possible that some workers’ job preferences changed, at least temporarily, as the pandemic changed the perceived risks and other characteristics of many jobs.

Finally, with many people on the sidelines of the labor market, and job openings at record high levels, employers may look to increase wages to entice potential employees back into the market. The BLS monthly measure of wage trends, average hourly earnings, has been heavily influenced by large employment shifts since the pandemic began. When employment dropped sharply in the spring of 2020, average wages increased, mainly because lower-paid workers were more likely to be out of work. Now that many businesses are reopening, some evidence of wage increases can be seen by focusing on the leisure and hospitality industry. From February 2020, just before the pandemic began, to June 2021, average hourly earnings for this industry rose 3.1 percent, after adjusting for inflation. Data from the Employment Cost Index, which are not influenced by employment shifts, show wages and salaries in the leisure and hospitality industry increasing 1.6 percent, after adjusting for inflation, for the year ending March 2021.

Editor’s note: Data for this chart are available in the table below.

While some employers might find it hard to hire workers quickly, there is a lot of hiring going on. Consider the leisure and hospitality industry, which includes restaurants. In May, a whopping 9.0 percent of positions were open. But the hiring rate was even higher—9.3 percent, far above levels before the pandemic.

Editor’s note: Data for this chart are available in the table below.

The labor market cannot be characterized with a single number. Over time, people change jobs, look for jobs, or leave the labor market entirely. These dynamics can be complicated, as they certainly were during the COVID-19 pandemic. This discussion covers just some of the many measures BLS reports to illuminate labor market conditions. For more analysis of JOLTS data, check out recent articles in the Monthly Labor Review and Beyond the Numbers.