At first glance, February’s record high spike in new job openings seems like cause for a tolling of the labor recovery bells. The Bureau of Labor Statistics reports the number of job openings jumped from 3.6 million at the end of January to 3.9 million at February’s end. This is noted as the highest number of job openings since May 2008. Should job seekers begin rejoicing? Not so fast.
Indeed, we are looking at a jump in job openings that could potentially have significant impact on job seekers and the labor rate; but is the national hire rate following suit? The short answer: not so much. Hiring is just barely keeping pace with the growth in population and the drop in the unemployment rate is attributed more to people dropping out of the labor market than to job seekers getting hired. The jobs exist, but employers appear to be hesitant in filling them. Let’s consider some reasons behind the disparity:
- Openings are for very specific skillsets for which there are limited candidate pools in the locations where they exist (e.g. the resurgence of niche manufacturing in the rust belt, birth of natural gas in the upper Midwest)
- Mobility among Americans (while just beginning to trend up) continues at an all-time low due to underwater mortgages and continued economic uncertainty
- Belief that even with 7.6% unemployment, “purple squirrel” candidates can be found and closed by hiring managers
- Hiring decisions are halted by the overall economic ebbs and flows making hiring managers fearful that the company’s needs will change
For an early indicator of trends in the unemployment rate and pressure in the labor market keep an eye on the job openings and the national hire rate figures. If we see a continued downward trend in the unemployment rate caused by increased hiring rates, chances of higher inflation twelve to twenty four months later will increase as well.