Lou Adler offers an interesting perspective on the Labor Department’s job openings numbers in his post “The Feb 11 JOLTS Report Predicts…” I am really glad that he discussed the JOLTS numbers. It is important to look beyond the two pieces of data—the official Unemployment Rate and the monthly jobs report—on which the media fixate.
There is a trend that comes out of the job openings numbers that you should be aware of: The Beveridge curve. (Okay, I admit that I intentionally misspelled it beverage in the post title so that I could use the soft drink image). The Beveridge curve takes the job openings rate and compares it to the Unemployment rate. As the job openings rate goes up or down, so does the Unemployment rate.
Here is why you should be especially concerned about the relationship between job openings and Unemployment today. In 2010 the Beveridge curve shifted up and to the right where it has stayed through the end of 2013. That has been evidenced by relatively high Unemployment at a time when there are high numbers of job openings. The Bureau of Labor Statistics describes this situation as ‘inefficient job matching.’ It is a source of frustration for both businesses and job seekers and a real challenge for workforce professionals.
So, is the coincidence of high numbers of job openings and high Unemployment a cyclical issue that will eventually correct itself? Or is it a reflection of a real lack of skills among workers? We cannot be certain. But anecdotal evidence suggests that businesses should focus on developing the skills of their workers and job seekers should take the initiative to build their own skills.
If the data really interest you, information about the Beveridge curve can be found on pp. 19–23 of this document.