Labor Insanity: There Are Now A Record 4.6 Million More Job Openings Than Unemployed Workers

After several months of speculation that the US labor market had finally reached its absolute peak with the number of job openings drifint around 10-11 million, today the BLS restarted the debate whether we have seen the worst of the labor shortage when it reported that one month after what last month was the biggest drop since the start of the pandemic (since revised to a more modest number), in December the number of job openings once again jumped, rising by 150K to a near record 10.925 million, smashing expectations of a decline to 10.3 million and just below the July all time high of 11.1 million.

Looking at the details, job openings increased in several industries with largest increases in accommodation and food services (+133,000), information (+40,000), and nondurable goods manufacturing and state and local government education (+31,000 each). Job openings decreased in finance and insurance (-89,000) and in wholesale trade (-48,000).

What we find far more remarkable, however, is that amid the continued tightening in the labor market, the bump in job openings meant that there was a new record, or 4.6  million, more vacant jobs than unemployed workers in December, confirming that the US labor market remains woefully, perhaps irreparably cracked.

And with far more job openings than unemployed workers, this meant that in December there were again less than 1 unemployed workers – a record low 0.644 to be exact – for every job opening, down from 0.6511 in November, from 0.6689 in October and down from a record high 4.6 at the peak crisis moment last April.

Offsetting the jump in job openings in December, we saw a modest drop in hiring: according to the BLS, hiring declined by 333K to 6.263 million, with the largest number of hires declining in professional and business services (-159,000).

One last observation comes from the December quits rate: after the number of Americans quitting their job hit an all time high 4.527 million (revised down to 4.499 million), it dipped modestly in December to 4.338 million, which nonetheless was the third highest print in series history.

The quits rate of 2.9%, dipped from a record high 3.0%, with the highest rates in leisure/hospitality (5.8%), trade/transport (3.8%), and professional/business services (3.6%) while among lowest are mining/logging (1.7%), financial activities (1.5%), and government (1%). Quits decreased in health care and social assistance (-89,000), accommodation and food services (-64,000), and construction (-44,000). Quits increased in nondurable goods manufacturing (+19,000)

As a reminder, this “take this job and shove it” indicator is generally seen as a real-time proxy of how marketable employees think they are, as they tend to quit jobs and look for higher paying occupations when the job market is red hot. And since it tends to lag peaks in job openings modestly, the dip in quits – which however remained just shy of all time highs – was probably not all that surprising.