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By Palash R. Ghosh: Subscribe to Palash's RSS feed
October 8, 2010 2:45 PM EDT
Heidi Shierholz, an economist at the Economics Policy Institute (EPI), a Washington DC-based think tank, said the total number of job openings in August amounted to 3.2 million, while the total number of unemployed workers stood at 14.9 million.
“This means that the ratio of unemployed workers to job openings was 4.6-to-1 in August, unchanged from the revised July ratio,” she said.
“It is important to note that this ratio does not measure the number of applicants for each job. There may be throngs of applicants for every job posting, since job-seekers apply for multiple jobs.”
The 4.6-to-1 ratio means that for every 46 unemployed workers, there are only 10 available job openings.
The current job-seekers to job-openings ratio of 4.6-to-1 is a significantly improvement from its peak last November of 6.2-to-1.
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However, there remains a severe lack of jobs,” Shierholz said.
She cites that the ratio of unemployed workers per job opening is still much higher than at the worst point in the early 2000s recession, which was 2.8 unemployed workers per job opening in September 2003. In the first half of 2007, before the downturn began, the ratio averaged 1.5-to-1. August’s ratio, at 4.6-to-1, was over three times that high.
“With so many unemployed workers per available job, it is no surprise that workers who have gotten laid off continue to get stuck in unemployment for very long periods,” she commented.
“In August, 42.0 percent of this country’s unemployed workers had been unemployed for over six months.”
Furthermore, Shierholz notes, when calculating the ratio of job seekers to job openings, if we were to include not just the 14.9 million unemployed workers, but also the 8.9 million “involuntarily part-time” workers (part-time workers who want and are available for a full-time job, and are therefore likely job searching), the ratio would be 7.4-to-one.
In August there were 11.7 million more unemployed workers than there were job openings, she added.
Shierholz also states that if, as some have claimed, unemployment right now is predominantly structural, (meaning that unemployment is high primarily because today’s unemployed workers are not well-suited for the jobs becoming available), then we would expect to find some sectors where there are more unemployed workers than job openings, and some sectors where there are more job openings than unemployed workers.
“In other words, for structural unemployment to be a major part of overall unemployment, there would have to be significant labor shortages in some areas, as employers with job openings couldn’t find suitable workers,” she noted.
“But there are no major sectors where that is happening – the lack of job openings is occurring across the board.”
Indeed, unemployed workers dramatically outnumber job openings in every sector. The discrepancy is particularly pronounced in the construction and manufacturing sectors.
“In other words, the economy isn’t lacking the right workers, it is simply lacking jobs,” she asserted.
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