For the first time ever, the U.S. has more job openings than unemployed.
In July 2018, The Labor Department reported there were 6.9 million job openings and 6.3 million people unemployed.
When the most recent recession began (December 2007), the ratio of unemployed persons per job opening was 1.9. At the end of the recession (June 2009), there were 6.1 unemployed persons per job opening. The ratio peaked at 6.6 unemployed persons per job opening in July 2009 and has declined since then. The ratio of unemployed persons per job opening was 0.9 in July 2018.
The ratio of openings to hires has not been higher at any point in time since the Labor Department started recording this data in 2000. There are plenty of jobs out there, but employers are having a hard time filling them.
The “official” unemployment rate is at a 17-year low of 3.9%, well below the 4.5-5.0% level the Fed considers to be full employment. However, the “broader” unemployment rate includes other measures of labor market slack—such as the share of employment made up of involuntary part-time workers or the percentage of people not working or looking for work who want a job. We should utilize the broadest measure of unemployment because it includes those underemployed individuals. At 7.4%, the “broad” rate amounts to an approximate total of 12.0 million individuals who are unemployed and underemployed. Given 12 million available workers and 6.9 million job openings, it seems like the U.S. has plenty of resources human resources to support this economic expansion.
So why isn’t the U.S. filling all of its job openings?
We contend there are three problem areas:
- Education
- Training
- Foreign Born Workforce
Education: The sharpest increase in U.S. job openings is in professional and business services, which includes a range of occupations such as accountants, architects and engineers. Increased openings are also especially evident among manufacturers. Most of those jobs require either an associates or bachelors degree. But as you can see in the chart below, while the jobless rate is falling for all worker education levels, the greatest percentage of unemployed people 25 years and older are those with a high school degree or less. Consequently, most unemployed people do not have the education necessary to land a job in the fastest growing markets. Families need to reinforce the importance of higher education with their children. Schools need to tailor their curriculum to help Americans obtain advanced degrees or specialized skills to take advantage of the tremendous opportunity offered by today’s economy.
Training:
With 6.9 million job openings and a shortage of skilled workers, employers are struggling to fill middle- and high-skilled occupations. This labor shortage is limiting their progress and, by extension, the U.S. economy to grow.
As reported by WorkingNation in July 2018, President Trump has signed an executive order creating the Council for the American Worker, composed of Cabinet members and advisers. The council will oversee current government training programs and measure their effectiveness in preparing workers from high school graduates to mid- and late-career workers for jobs in the new economy.
The executive order and corporation’s “Pledge to American Workers” are an effort to increase apprenticeships, STEM training and retraining for older workers to close this employment gap and help unemployed and underemployed Americans get back to work. Watch this September 18 video for an update on the administration’s progress.
Also check out this Deloitte Insights report on holding Government training programs accountable and tailor new training programs to better meet the needs of both job seekers and employers.
Foreign Born Labor:
The foreign born civilian labor force in the U.S. includes legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants.
In 2017, there were 27.4 million foreign-born persons in the U.S. labor force, comprising 17.1 percent of the total — a 163% increase since 1980.
Hispanics accounted for 47.9 percent of the foreign born labor force and Asians accounted for 25.2 percent.
In 2016, the largest share of the foreign born labor force, approximately 32 percent, worked in management, professional, and related occupations — again, the area with the sharpest increase in U.S. job openings.
Additionally, the U.S. also admits over 1 million foreign temporary workers per year on visas — 824,628 Nonimmigrant Temporary Workers in Specialty Occupations (H-1B) and 201,082 Nonimmigrant Nonagricultural Temporary or Seasonal Workers (H-2B).
Non-Immigrant Temp Workers H-1B
Nonimmigrant Temp Worker H-2B
Foreign born workers are generally willing to accept lower salary and wages, as their median weekly earnings were $730 in 2017, compared with $885 for their native-born counterparts.
There is a need for foreign born workers willing to do jobs that Americans don’t want for lower pay, otherwise certain businesses wouldn’t have a sufficient work force to meet customer demands. However, given the broad unemployment numbers are nearly double current job openings, we believe the U.S. should reduce the influx of foreign born labor while increasing education and training for the overabundance of workers already in country who are seeking employment.