Measuring Job Openings in the U.S. Labor Market

Measuring Job Openings in the U.S. Labor Market

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Updated February 28, 2024
Measuring Job Openings in the U.S. Labor Market
Introduction
data by more detailed industries and to release preliminary
The number of job openings is an economic indicator that
JOLTS data a month earlier than they are currently
can provide information about the potential strength or
released.
weakness of the labor market. It is often used in comparison
to another commonly cited labor market indicator: the
Trends in Job Openings
unemployment rate. The unemployment rate—the number
The number of job openings reported by JOLTS generally
of individuals without a job but looking for work as a share
falls during recessions and rises during economic
of the labor force—measures excess labor supply, while the
expansionary periods. In 2021 and 2022, the number of job
job openings rate is a measure of unmet labor demand.
openings rose to levels much greater than those observed
before the pandemic, with a high of over 12 million in
Interest in job openings, or job vacancies, is cited
March 2022 (shown in Figure 1).
frequently in the media and during congressional hearings.
Part of this interest is due to the high number of job
Figure 1. Total U.S. Nonfarm Job Openings and Hires
openings in the United States in recent years. Although job
(seasonal y adjusted, in thousands)
openings have decreased somewhat since their peak of 11.4
million in July 2022, they remain higher than before the
COVID-19 pandemic.
How are job openings data collected?
The Bureau of Labor Statistics (BLS) began collecting data
consistently on job openings in 2000 through the Job
Openings and Labor Turnover Survey (JOLTS). JOLTS
collects monthly data from a sample of 21,000 business
establishments. In addition to job openings, data are
collected on new hires (i.e., new employees, not internal
transfers or promotions) and job separations (i.e.,
employees whose positions were eliminated or who quit,
retired, or were laid off or fired).

Source: Bureau of Labor Statistics, Job Openings and Labor
Job openings are defined in JOLTS as the total number of
Turnover Survey (JOLTS)
positions open on the last business day of the month. A job
opening exists only if
The job openings rate, calculated as the number of job
•
openings divided by the sum of the number of nonfarm
a specific position exists and there is work available for
employees and the number of job openings, has followed
that position (either full or part-time),
similar trends to the number of job openings. The rate was
•
3.7 when data collection began in December 2000,
the job could start within 30 days, and
bottomed out at 1.7 in April and July 2009, and peaked at a
•
high of 7.4 in March 2022.
the employer is actively recruiting outside workers
High levels of job openings indicate unmet demand for
JOLTS does not include the following in job openings:
workers. This could be a result of a mismatch (e.g., by skill,
positions open only to internal transfers, promotions or
by compensation, by geography) between unemployed job
demotions, or recalls from layoffs; openings for positions
seekers and prospective employers or a general shortage of
with start dates more than 30 days in the future; positions
workers available to fill job openings. However, the low
for which employees have been hired but the employees
cost of posting job openings on the internet also means
have not yet reported for work; and positions to be filled by
firms can keep vacancies open for long periods while
employees of temporary help agencies, employee leasing
waiting for the applicant with the optimal combination of
companies, outside contractors, or consultants.
skills and salary requirements for the open job.
BLS currently publishes JOLTS data by broad industries,
Increases in job openings can indicate a growing economy
by state, and by establishment size groups. The President’s
with high levels of job creation, especially when combined
FY2024 budget request includes additional funding to
with a declining unemployment rate. A high and increasing
increase the JOLTS sample size in order to publish JOLTS
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Measuring Job Openings in the U.S. Labor Market
number of job openings may be a sign of full employment
The Relationship Between the Unemployment
when the unemployment rate is very low or an indication of
Rate and the Job Openings Rate
a mismatch between supply and demand in the labor market
In general, lower unemployment rates are associated with
if openings only increase in certain economic sectors or
higher job openings rates: both indicate a strong labor
geographic areas. Combining job openings data with hires
market. However, the precise relationship between the job
data and unemployment data provides additional context
openings rate and the unemployment rate has not been
and insights into underlying trends in the labor market.
steady over time. Figure 3 shows this relationship (known
as the Beveridge Curve) for the three most recent
Job Openings and Hires
expansionary periods. Each dot in the figure represents the
Job openings and hires are related—when a person is hired
unemployment and job openings rates during one month.
to an open position, the corresponding job opening may
The curve traced out by these dots differs in each period.
disappear. Consequently, these two variables are often
compared. As shown in Figure 1, from 2000 to 2014 the
Figure 3. The Job Openings Rate Compared with the
number of hires exceeded the number of job openings.
Unemployment Rate
Since then, job openings have exceeded hires (except in
(seasonal y adjusted, expansionary periods only)
May and June of 2020). The gap between the number of job
openings and the number of hires reached its highest level
in March 2022 and generally has been declining since then.
The Number of Unemployed Workers and
Job Openings
Many job openings can be filled by unemployed people
(those who are not working, are available to work, and are
currently searching for work). Thus, the ratio of the number
of unemployed people to the number of job openings
(shown in Figure 2) provides information on labor
shortages or surpluses. During the 2007-2009 recession,
this ratio rose rapidly with multiple unemployed workers
for each job opening, suggesting a labor surplus. The ratio

gradually fell after 2009 and was below 1.0 starting in
Source: Bureau of Labor Statistics, Job Openings and Labor
March 2018. A ratio below 1.0 means more job openings
Turnover Survey (JOLTS) and Current Population Survey (CPS)
than unemployed people in the labor market as a whole,
suggesting a labor shortage. The ratio remained below 1.0
In each expansion, the same unemployment rate has been
until the COVID-19 recession, and rapidly returned below
associated with a higher job openings rate than in the
1.0 in May 2021. It has been below 1.0 since then.
previous expansion (i.e., the curve has shifted upward). The
The number of unemployed people only includes people
change between the 2001-2007 expansion and the 2009-
searching for work in the past month. It does not include
2020 expansion was attributed to
people who are out of the labor force (those who are not
•
working and not actively searching for work) or those
reductions in employers’ recruiting efforts,
working fewer hours than they would prefer.
• a mismatch between job seekers’ skills and the skills
Figure 2. Unemployed People per Job Opening
required for the available jobs, and
• an erosion of workers’ skills and networks when they
were out of work for long periods.
The shift in this curve between the 2009-2020 expansion
and the current expansion has been attributed to increases in
workers switching jobs without ever being unemployed.
Since March 2022, the job openings rate has been falling
with little increase in the unemployment rate. The
historically high level of job vacancies in early 2022 has
been suggested as the reason that a decrease in demand for
labor during 2022 and 2023 was not accompanied by an
increase in unemployment.
Source: Bureau of Labor Statistics, Job Openings and Labor
Turnover Survey (JOLTS) and Current Population Survey (CPS)
Elizabeth Weber Handwerker, Analyst in Labor Policy
IF11054

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Measuring Job Openings in the U.S. Labor Market

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