"America's job market looks as if it
is coming into better balance, but it might only be halfway there.
The Labor Department on Thursday
reported that there were a seasonally adjusted 9.8 million unfilled job
openings in the U.S. on the last day of May, down from April's (upwardly
revised) 10.3 million and well below the record 12 million posted in March of
last year.
But, let's not kid ourselves, that
is still a ton of job openings, amounting to about 1.6 unfilled positions for
each person counted as unemployed. In February 2019, before the Covid crisis
struck, and when the job market was still quite strong, that ratio was about
1.2. To get back to that level, openings would need to fall by around 2.8
million -- more than the 2.2 million they have fallen so far.
Coupled with a separate report on
Thursday from ADP showing an unexpected jump in private-sector payrolls last
month, the job-openings figures reinforced worries that the Federal Reserve
would continue raising rates beyond its meeting later this month. The Treasury
market sold off sharply Thursday morning, and stocks fell.
It is possible that the job market
isn't quite as tight as the Labor Department's figures on job openings seem to
indicate. The response rate for the survey underlying the data has fallen
sharply, and some economists believe that is inflating the figures. Alternative
measures, such as a job-opening index from job-search site Indeed, suggest the
labor market has loosened a bit more.
That said, Indeed's figures still show
job openings are currently a seasonally adjusted 27% higher than just before
the pandemic.
One thing that is clear, regardless
of where one looks, is that services sectors that experienced big job losses
early in the pandemic are still struggling to restaff.
In a group that Bank of
America economists have dubbed "high-touch" services, because they
entail a lot of direct contact -- the leisure and hospitality sector, the
private education and health sector, and the "other services" sector
that includes business such as auto mechanics and dry cleaners -- there were
3.6 million job openings in May versus 2.4 million before the pandemic.
Indeed's data similarly show that job openings in areas such as nursing,
personal care and home health, and child care are elevated.
Overall job
openings in lower-touch industries are generally high relative to before the
pandemic, too, but not by as much.
The need for high-touch workers is
probably part of why the Fed's efforts to slow the job market haven't had as
much traction as a lot of economists, investors and, likely, Fed officials,
thought they would. Many businesses that are understaffed relative to before
the pandemic probably still want to hire even if they are a bit worried about
the economy.
The good news here is that the
still-high level of openings has so far helped prevent the job market from
lurching lower. The hope is that inflation will cool quickly enough in the
months ahead that the Fed doesn't feel a need to force the issue." [1]
1. Bringing Job Market Into Balance --- Employers are still begging for workers. Lahart, Justin.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 07 July 2023: B.12.