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What is the unemployed people per job openings ratio? A 21-year case study into unemployment trends

By Arthak Adhikari and Tamara Mickle

Since the start of the COVID-19 pandemic in March 2020, there have been extreme movements in the number of unemployed people and job openings. The Bureau of Labor Statistics (BLS) has a useful measure that can help us understand and analyze these movements in the U.S. labor market: the unemployed people per job openings ratio. The ratio is calculated by dividing the number of unemployed people by the number of job openings in a particular month. This number provides insight into how tight or slack the U.S. labor market is. In other words, it tells us about the relationship between labor supply (unemployed people) and labor demand (job openings).

This Beyond the Numbers article will describe the unemployed people per job openings ratio and examine unemployment and job openings trends by looking at estimates at the national level from December 2000 to December 2021, and at the state and regional level from December 2017 to December 2021. National data allows users to see the relationship more clearly between labor supply and demand nationwide, while state and regional data allows for comparative analysis across state labor markets.

Analyzing recent unemployment and job openings trends

In December 2021, job openings topped 11.4 million. This was the highest value recorded in a month since data collection on job openings began in December 2000 and was the sixth time in 2021 that the number of monthly job openings exceeded 10.0 million. The number of unemployed people also experienced large shifts. In February 2020, before the onset of the COVID-19 pandemic, unemployed people numbered 5.7 million. Two months later, the number stood at 23.0 million, reflecting the initial shock of the pandemic on the labor market. In December 2021, the number of unemployed people had fallen to 6.3 million but was still higher than its February 2020 level.

At the national level, the unemployed people per job openings ratio was 0.6 in December 2021, compared with 1.6 a year earlier. A ratio of 1.0 means there is a job available for every unemployed person. Ratios less than 1.0 signal tighter labor markets in which firms have more job openings than there are people looking for work. In contrast, ratios greater than 1.0 indicate slack in the labor supply, as more unemployed people compete for each job opening.

In addition to estimates at the national level, BLS has recently started publishing state estimates on job openings. This, combined with data on state unemployment, allows for the construction of regional and state-level ratios of unemployed people per job opening. For example, in December 2021, there were 24 states with values less than the national ratio of 0.6 and 21 states and the District of Columbia with ratios greater than or equal to the national ratio. This varied distribution shows us the importance of regional and state measures.

How does BLS construct and measure this ratio?

The unemployed people per job opening ratio is constructed by taking the number of unemployed people and dividing it by the number of job openings each month. These two components come from two different BLS surveys. The number of unemployed people is an estimate that comes from the Current Population Survey (CPS); the Local Area Unemployment Statistics (LAUS) program models CPS data to produce unemployment estimates for states. The job openings data for national and state estimates are from the Job Openings and Labor Turnover Survey (JOLTS).

To be counted as unemployed, certain criteria must be met. These factors are the individual was not employed during the survey reference week, they were available for work during the survey reference week, and they made at least one specific active effort to find a job during the 4-week period ending with the survey reference week. Additionally, people who were temporarily laid off and expecting to be recalled to their job are also counted among the unemployed.

Similarly, for a job to be considered open, the following three conditions must be met:

• There is a specific position exists and work is available for that position. This position may be full-time or part time, and it may be permanent, short-term, or seasonal.
• The job could start within 30 days, regardless of whether the employer can find a suitable candidate during that time.
• The employer is actively recruiting workers from outside the establishment to fill the position. Active recruiting means that the establishment is taking steps to fill a position. It may include advertising in newspapers, television, radio, posting internet notices, etc.

Excluded from the job openings counts are positions open only to internal transfers, promotions, demotions, or recall from layoffs. Also excluded are openings for positions with start dates more than 30 days in the future, positions for which employees have been hired but have not yet reported for work, and positions to be filled by employees of temporary help agencies, employee leasing companies, outside contractors, or consultants.

Analyzing the national data

Chart 1 shows movements in the number of unemployed people over time. Changes in this measure can affect the unemployed people per job openings ratio.

In the 21-year period from December 2000 to December 2021, the U.S. economy has experienced three recessions and expansionary periods following those recessions. As a result, the number of unemployed people has gone through cycles that have rapidly increased and then slowly stabilized. For example, the highest number of unemployed people occurred at the onset of the COVID-19 pandemic in April 2020, when 23.0 million people were unemployed. By December 2021, this had decreased to 6.3 million. While the magnitude of the changes was not as great, in the previous two recessions, the same general trend occurred.

If the number of unemployed people grows at a faster rate than the number of job openings, then the unemployed people per job openings ratio increases. Conversely, if the number of unemployed people grows at a slower rate than the number of job openings, then the unemployed people per job openings ratio decreases.

Chart 2 plots the number of job openings from December 2000 to December 2021. While the number of job openings experienced periods of decline during recessionary times, it has grown rapidly following the two most recent recessions and has surpassed its prerecession levels. The number of job openings was lowest in July 2009 (2.2 million), following the Great Recession (December 2007–June 2009). The number then trended up until mid-2018, when it leveled off and then began a slight decline before dropping sharply at the onset of the COVID-19 pandemic, to a low of 4.7 million in April 2020. Still considerably higher than its low during the Great Recession, the number began to rise in May 2020 and reached its highest level in December 2021 (11.4 million), nearly double the prepandemic figure seen in February 2020.

If the number of job openings grows at a rate faster than the number of unemployed people, then the ratio decreases.

When we plot unemployed people and job openings together along with the difference between the two measures (unemployed people minus job openings), we start to see interesting trends. (See chart 3.) There were 33 instances where the difference is negative, meaning in the given month there were more job openings than unemployed people. All 33 instances occurred after 2017, starting with January 2018, and continued until March 2020. For example, in 2018, there were 10 months when the number of job openings was greater than the number of unemployed people. This coincides with unemployment rates from January 2018 to February 2020, which were low by historical standards, ranging between 4.0 percent and 3.5 percent. In 2021, there were more job openings than unemployed people in the last 6 months of the year.

Chart 4 plots the unemployed people per job openings ratio. The ratio was at its highest at 6.5 in July 2009, right after the end of the Great Recession, when there were 14.6 million unemployed people compared with 2.2 million job openings. In April 2020, the ratio spiked to 4.9 reflecting the impact of the COVID-19 pandemic. The ratio was 0.6 in both November and December 2021, the lowest since data collection on job openings began in December 2000.

Analyzing state and regional data

As previously mentioned, there is notable variation within states and regions.

Chart 5 shows the unemployed people per job openings ratio in regions and states in December 2021 compared with the national ratio. The Northeast and West both had ratios exceeding the national ratio of 0.6.

The Northeast had the highest ratio at 0.8, with 1.5 million unemployed people and 1.9 million job openings. The West had a ratio of 0.7, with 1.9 million unemployed people and 2.7 million job openings. Though the Northeast and West had ratios higher than the national ratio, the Midwest and South had a stronger influence on the national value. This is because there were more job openings in the Midwest and South combined than the Northeast and West combined (6.8 million versus 4.6 million). The same was true of the unemployed, who numbered 3.8 million in the Midwest and South versus 3.4 million in the Northeast and West.

In the Northeast, only 3 states had unemployed people per job openings ratios greater than or equal to the regional average of 0.8. Even though only 3 states had ratios at or above 0.8, the Northeast had an overall ratio of 0.8 because the states in question, Connecticut, New Jersey, and New York, made up a large portion of the total number of unemployed and job openings in the region.

The West was like the Northeast. In this region most of the states (9 out of 13) were at or below the national ratio. However, the 4 remaining states had ratios higher than both the national and regional ratio. These states, which included California, had the highest number of unemployed people and job openings thus they pushed the regional ratio up.

In the Midwest, there were three states that had unemployed people per job openings ratios greater than or equal to the national ratio. These states—Illinois, Michigan, and Ohio—were also the states with the highest number of unemployed people and job openings. Even so, the regional ratio was at 0.5 because half of the states in the region had ratios under 0.5.

In the South, there were a little over half the states (9 out of 17) which had ratios at or above the national ratio of 0.6. The ratio for the entire region was identical to the national ratio.

Chart 6 shows the unemployed people per job openings ratio for states from December 2017 to December 2021.

During this 5-year period, the U.S. average unemployed people per job openings ratio was 1.2. California was the state with the highest average ratio during this period (1.6). The state with the second highest average ratio was Nevada (1.5). Of the states that had the five highest average unemployed people per job openings ratios, three of them were in the West region (California, Nevada, Washington). The two other states in the top five were New York (third at 1.5) and Connecticut (fourth at 1.4). In contrast, the states with the lowest ratios were North Dakota 0.6; Nebraska, Utah, and South Dakota at 0.7; and Vermont at 0.8.

When we look at the onset of the COVID-19 pandemic, in February 2020 the national unemployed people per job openings ratio was 0.8. That month, 25 states and the District of Columbia had ratios under the national ratio of 0.8 and 25 states had ratios higher than the national ratio. The national ratio peaked to 4.9 in April 2020. In this month, 38 states and the District of Columbia had ratios under the national ratio, and 12 states had ratios higher than the nation. Nevada had the highest unemployed people per job openings ratio in April 2020 at 11.6. In this month, Nevada had 406,325 unemployed people and 35,000 job openings.

For December 2021, when the national unemployed people per job openings ratio was 0.6, four states (California, New Mexico, Connecticut, and New York) had ratios of 0.9, which was the high for the month. Three states (Utah, Nebraska, and Indiana) had ratios of 0.3, which was the low for the month.

Conclusion

In conclusion, the unemployed people per job openings ratio is a valuable measure that can be used to identify tightness or slack in the economy. When ratios equal 1.0, there is approximately 1 unemployed person per job opening. When less than 1.0, the labor market is tight, as job openings outnumber the unemployed. When greater than 1.0, there is slack in the market because there are more unemployed people than available jobs. Having regional and state data allows for additional layers of analysis. The unemployed people per job openings ratio allows users to see the relationship more clearly between labor supply and demand not only nationwide, but also with greater detail across regions and states. This allows for comparative analysis across state labor markets.

For the latest national unemployed people per job openings ratio please see our chart. You can find the most current data in the JOLTS database.

With the release of JOLTS state annual revisions scheduled June 29, 2022, JOLTS will begin to release monthly state unemployed to job opening data, map, and chart.

To learn more about the data used in this paper, please see the program pages for JOLTS, CPS, and LAUS.

All data used in this paper are seasonally adjusted, to learn more about seasonal adjustment see the JOLTS, CPS, and LAUS pages on the subject.

Recessions are defined by the National Bureau of Economic Research (NBER).

This Beyond the Numbers article was prepared by Arthak Adhikari, economist in the Office of Publications and Special Studies (OPUBSS) and Tamara Mickle, economist in the Office of Employment and Unemployment Statistics (OEUS), U.S. Bureau of Labor Statistics. E-mail: Joltsinfo@BLS.GOV; telephone: (202) 691-5870; E-mails: Adhikari.Arthak@bls.gov and Mickle.Tamara@bls.gov.

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services or the information voice phone at: (202) 691-5200. This article is in the public domain and may be reproduced without permission