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The unemployed and job openings: A data primer

While the Great Recession in the United States technically ended in 2009, economic recovery since then has been painfully slow. Growth lags even as politicians battle over deficit reduction, poverty levels are elevated, and every job-creation and unemployment report is closely watched. The number of long-term unemployed remains high as job searches stretch on, and certain groups such as returning veterans have had particular difficulty finding work.

To better understanding the current job situation in the United States, a 2013 report by the Congressional Research Service “The Unemployed and Job Openings: A Data Primer,” looks at employment statistics in the U.S. between 2001 and 2012. The author, Donald Hirasuna, a labor policy analyst with the CRS, examined data from the Current Population Survey and the Job Openings and Labor Turnover Survey.

Two statistics get particular scrutiny: The unemployment rate, which measures the excess supply of workers during a given period; and the ratio of unemployed persons per job opening, which provides information about demand for workers. The unemployment rate is determined by dividing the number of unemployed by the number of persons in the labor force (defined as individuals 16 years and older who are either employed or actively searching for work). The ratio of unemployed persons per job opening is calculated by dividing the number of unemployed persons with the number of job openings.

The study’s findings include:

  • The ratio of unemployed persons per job opening was highly correlated with the unemployment rate from 2001 and 2012. In the wake of the recent recession, there have been more unemployed persons looking for work per job than is generally the case.
  • Between January 2001 and February 2012, the U.S. economy underwent two recessions. The first began in March 2001 and ended in November 2001, while the second began in December 2007 and ended in 2009.
  • “As the economy expanded … the unemployment rate decreases to a low of 4.4% in October of 2006. Unemployment rates turn back upward again as the economy enters the 2007-2009 recession. During the recession, unemployment rates rise sharply, especially during the last year. The rate reaches a high of 10% in October 2009. Since then, unemployment rates have lowered to approximately 8%.”
  • Job openings decreased as the economy entered the 2007-2009 recession. One month after the end of the recession, job openings reached a low of 2.2 million. Openings increased following the recession, reaching a total of 3.6 million in February 2012.
  • The ratio of unemployed persons per job opening saw improvement following the 2007-2009 recession prior to reductions in the unemployment rate.
  • “Even though both ratios have reduced, they remain at higher levels than prior to the 2007-2009 recession. As of February 2012, the ratio of unemployed persons per job opening is 3.6. This is higher than the 2.9 that occurred in September of 2003, which is the high point of all the monthly ratios prior to the most recent recession.
  • Even though the ratio of unemployed persons per job opening is high, it has improved more substantially since the end of the recession than the unemployment rate and other labor market indicators.
  • From January 2001 through February 2012, the ratio of unemployed persons per job opening was consistently higher in the goods-producing sector than in the other sectors included in this study, regardless of the economic cycle. Goods production is defined as the production of tangible items, such as cell phones and televisions. The other sectors included are producer services, consumer services and government.

The author concludes: “A variety of labor market indicators show that the 2007-2009 recession is one of the most severe recessions in the post-World War II era. Unemployment, employment, labor force participation, and hours worked all indicated a substantial deterioration in labor market conditions.” He suggests that the ratio of unemployed persons per job opening provides insight into economic conditions and that it could be a useful addition to employment statistics.

Tags: financial crisis

Citation: Hirasuna, Donald. "The Unemployed and Job Openings: A Data Primer," Congressional Research Service, January 2013.