Newest Job Openings Data Isn’t As Good As It Seems

The ratio of job postings to unemployed job hunters dropped below 4% for the first time in nearly three years, but if you factor in workers who gave up looking for jobs, the ratio is much worse.

Author:: Seth Fiegerman
Publish date:: Feb 8, 2012 4:02 PM EST

NEW YORK (MainStreet) — There was one job opening for every 3.9 unemployed people looking for work in December, the most favorable ratio of unemployed job hunters to job openings in nearly three years, according to data released this week from the Labor Department.

While this represents a significant improvement in job opportunities compared to the worst of the recession, it only tells part of the story. As the chart above shows, if you factor in all the unemployed people who are willing and able to work, but have simply given up looking for jobs, that ratio worsens to one job posting for every seven people out of work.

This may not seem like a major issue at the moment, but some leading economists predict that many of those who stopped looking for work will resume the job hunt in the coming months if the labor market continues to improve, adding much more competition to the market. Unless the number of postings increases significantly, job hunters may quickly realize there are not nearly enough positions to go around.

Seth Fiegerman is a staff reporter for MainStreet. You can reach him by e-mail at seth.fiegerman@thestreet.com, or follow him on Twitter @sfiegerman.