For the first time on record, the number of job openings in the United States exceeds the number of unemployed Americans – a trend that may soon give workers more leverage to demand pay raises.
With employers struggling to fill openings, the number of available jobs in April rose 1 per cent to 6.7 million from 6.6 million in March, the Labour Department said on Tuesday. That’s the most since records began in December, 2000.
The figures underscore the consistent strength of the U.S. job market. The unemployment rate has reached an 18-year low of 3.8 per cent. Employers have added jobs for a record 92 straight months. And the abundance of openings suggests that hiring will continue and that the unemployment rate will fall even further. Not since December, 1969, when the rate was 3.5 per cent, has unemployment been lower than it is now.
Employers appear confident about the economic outlook and growth. Analysts expect faster consumer spending to help accelerate growth to roughly a 3.5-per-cent annual rate in the April-June quarter, after growth had lagged slightly in the first three months of the year.
In July, 2009, just as the Great Recession was officially ending, there were, on average, 6.7 unemployed people for each job. Now, that figure has fallen to just 0.95 jobless people per opening.
The sharpest increase in openings in April was in a category called professional and business services, which includes a range of occupations, from accountants, architects and engineers. Increased openings were also especially evident among manufacturers and at hotels and restaurants.
Regionally, the largest increases in available jobs in April were in the Midwest and West. Open jobs in the Northeast and South barely changed.
Yet, it’s not clear that employers are trying very hard to fill all their open jobs. Online job boards and software that makes it easier to scan résumés for keywords also make it easier for employers to post openings and initially screen applications, even if they’re not actually prepared to hire.
The surest sign that employers were scrambling for workers would be steady pay gains, as businesses bid higher for the workers they need. Yet, wage increases remain sluggish, compared with previous periods when the unemployment rate was this low.
Hourly pay rose 2.8 per cent in May on average for all workers, excluding managers, compared with a year earlier. In April, 2000, the last time the unemployment rate was as low as it is now, hourly pay jumped nearly 4 per cent from the previous year.
That may indicate that employers aren’t as desperate to hire as the robust number of job openings would suggest. For example, data from the Federal Reserve Bank of Atlanta show that workers who switch jobs are starting to enjoy healthier pay gains. That is a sign that companies are willing to pay more to lure workers from other companies.
But by historical standards, pay increases even for job-switchers are relatively low. In April, wages for job-switchers rose 4 per cent, on average. But in December, 2000, near the peak of the late 1990s boom, they were receiving raises of 6.5 per cent.
Martha Gimbel, director of economic research at job listing site Indeed, points out that pay increases for Americans who remain in their jobs are actually falling. Wages for job-stayers were up just 2.9 per cent in April, compared with 3.7 per cent six months earlier.
Separate research from the Federal Reserve Bank of Kansas City, released last month, shows that 14.5 per cent of people who remained in their jobs in early 2018 received no pay increase from a year earlier. That figure was just 11 per cent before the Great Recession began in late 2007.
“That is really astonishing to me at this point in the recovery,” Ms. Gimbel said. “That just signals that employers are not worried about their employees being poached.”