The March Job Openings and Labor Turnover Survey (JOLTS) data released this morning by the Bureau of Labor Statistics showed a labor market stuck in neutral. Job openings declined by 111,000, and the number of hires and separations also dropped, by 74,000 and 28,000, respectively. These kinds of numbers do not represent a labor market with accelerating opportunities. This is particularly bad news for the new graduates joining the workforce.

Low voluntary quits

One way many workers see professional growth is by leaving one job and taking another that offers better pay or opportunities. One measure of such opportunities for advancement is the number of voluntary quits throughout the workforce. All else equal, a larger number of people voluntarily quitting jobs indicates a labor market in which job opportunities are plentiful and employed workers have the flexibility to look for jobs that pay better and more closely match their skills and interests. During downturns, the number of voluntary quits falls as outside job opportunities become scarce. In 2006, nearly 3 million workers voluntarily quit their jobs each month. That dropped to a low of 1.6 million in August 2009. It has since been generally increasing, but it is still extremely low relative to before the Great Recession, and progress is bumpy and slow. In March, the number of voluntary quits held steady (increased by just 1,000) at 2.5 million, nearly 17 percent below its prerecession level.

While the low level of voluntary quits represents lost opportunities for workers of all ages, it illustrates a critical loss of opportunities for young workers, including new high school and college graduates, because they are more likely to be in the process of identifying their own abilities and interests and tend to change jobs more frequently than older workers as they search for a job that is a good match and that either pays more or has better potential for wage growth. Think, for example, of a young person who was lucky enough to graduate and find a job in 2007, the last spring graduation before the Great Recession began. Under normal circumstances that young person may have greatly benefited at some point in the last seven years from leaving her job for one that was a better match or offered better pay. Instead, she may have been locked in, unable to change jobs because of the lack of outside job opportunities. For more on the labor market prospects of young workers, see our recent paper, The Class of 2014: The Weak Economy Is Idling Too Many Young Graduates.

No job openings for more than 60 percent of job seekers

The total number of job openings in March was 4.0 million, down from 4.1 million in February. In March, there were 10.5 million job seekers (unemployment data are from the Current Population Survey), meaning that there were 2.6 times as many job seekers as job openings. Put another way: Job seekers so outnumbered job openings that more than 60 percent of job seekers were not going to find a job in March no matter what they did. In a labor market with strong job opportunities, there would be roughly as many job openings as job seekers.

Furthermore, the 10.5 million unemployed workers understates how many job openings will be needed when a robust jobs recovery finally begins, due to the existence of 6.2 million would-be workers who are currently not in the labor market, but who would be if job opportunities were strong. Many of these “missing workers” will become job seekers when we enter a robust jobs recovery, so job openings will be needed for them, too.

Today’s labor market weakness is not due to workers lacking the right skills

The figure shows the number of unemployed workers and the number of job openings by industry. This figure is useful for diagnosing what’s behind our sustained high unemployment. If our current elevated unemployment were due to skills shortages or mismatches, we would expect to find some sectors where there are more unemployed workers than job openings, and some where there are more job openings than unemployed workers. What we find, however, is that unemployed workers dramatically outnumber job openings across the board. There are between 1.3 and 7.5 times as many unemployed workers as job openings in every industry. In other words, even in the industry with the most favorable ratio of unemployed workers to job openings (health care and social assistance), there are still nearly 30 percent more unemployed workers than job openings. In no industry does the number of job openings even come close to the number of people looking for work. This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.