More evidence that the labor market is inverted with far more job openings than those willing to take those jobs

On the first Friday of every month, the U.S. Department of Labor releases its job report for the previous month. It is basically an estimate for how many net new jobs were created the previous month. The DoL breaks those down in many ways including geographically, occupational field, race, gender, etc.

Economists had expected 1 million net new jobs in April but only 266,000 were created, subject to later revision. Today, they released their monthly Job Openings and Labor Turnover Summary, which is basically an estimate for how many job openings there are (jobs not yet filled). This reports lags a month so the report released today was for March.

On the last business day of March, the job openings level reached a series high of 8.1 million (+597,000). The job openings series began in December 2000. The job openings rate increased to 5.3 percent. Job openings increased in a number of industries with the largest increases in accommodation and food services (+185,000); state and local government education (+155,000); and arts, entertainment, and recreation (+81,000). The number of job openings decreased in health care and social assistance (-218,000). The number of job openings increased in the Northeast and Midwest regions.

Taken together, these look to me like more evidence that we’re in a really, really weird labor market and one that almost no one alive has ever seen. Economists are calling this an inverted labor market. There are a variety of reasons for the labor market being upside down, but what it means is that there are FAR more job openings right now than people who are ready, willing, and able to apply and be hired.

Under half of Americans have been vaccinated so many don’t feel safe returning to jobs in stores, restaurants, or offices. Schools are closed or on a hybrid schedule in almost all of the country, so parents with school-aged kids often need to be at home with those kids. That’s only going to get worse as summer vacations start in about a few weeks. At least 600,000 and perhaps a million have died and hundreds of thousands are long-haulers and so effectively are disabled. Unemployment and stimulus benefits have reduced the need for people to work. Wages remain low.

Quite frankly, I think it is going to get worse before it gets better. I think we’re in for a summer of massive understaffing by restaurants, retailers, etc. with loads of them being unable to open or service being terrible. I was told about a friend of ours going out for a meal. It took two hours for the food to come because the restaurant was so understaffed. But I bet that restaurant is paying its employees less, inflation-adjusted, than it did decades ago. Restaurants that were paying $8 an hour before Covid are likely going to need to pay something like $20 to get the staff they need, so meals will go up by a couple of bucks or the restaurant owners will need to make less money.