The real problem with the economy isn’t that there are too few jobs available, but rather that there are too many.
When the recession began in December 2007, there were 4.4 million job openings, but that number dropped to less than 2 million in 2009 as the economy remained sluggish. Now, the number of job openings advertised has shot up again, rising to 3.2 million in August, according to a report from the Bureau of Labor Statistics.
However, hiring has not kept pace with this increase. According to the BLS report, employers hired only 71,000 more workers in August of this year than they did back in July 2009 when there were nearly 1 million fewer jobs available.
In fact, despite the increasing number of positions available, the job market itself has remained largely unchanged. The unemployment rate has stayed above 9.5% for the last 14 months, and some expect it will get even worse next year, rising back above 10%. To make matters worse, 30% of the 14.7 million unemployed Americans have now been out of work for a year or longer, setting a new record.
So why is it that the labor market can have more job openings but hiring remains stagnant? To some extent, it boils down to the reality that just because a new position opens up, it doesn’t mean the company is eager to hire for it.
As one staffing expert told USA Today recently, “companies are being pickier” with who they hire, content to wait for the perfect fit. And, as we’ve reported before, the majority of businesses remain concerned about consumer demand and the future of the economy, and are therefore hesitant to hire many new workers.
Another big factor is what economists commonly refer to as a “skills mismatch” between applicants and the positions available. In other words, even as jobs open up in certain industries, the positions themselves may require a different skill set than the applicants possess, partly because they may have been out of the workforce for too long and haven’t learned the new skills.
The skills mismatch theory also helps to explain why some professions have had better hiring rates than others. The professions that experienced improved hiring rates during the past year were mining, logging and construction. By comparison, the industries that saw hiring rates decline were generally more skill-intensive professions, like health care and education.
Yet, the unemployed may also bear some responsibility for the vast number of jobs left unfilled. Some have speculated that increasing the duration of unemployment benefits may persuade many job applicants to stop looking for work.
This point is obviously contentious, but one recent study from The Roosevelt Institute may offer some evidence for it. According to the study, unemployed Americans are now more likely to stop looking for a job than they are to find one.
Have we become a nation that gives up too easily?
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