Chief Economist, U.S Chamber of Commerce
July 07, 2021
The biggest issue facing the economy this summer is a shortage of workers going back to open jobs. In a recent op-ed, U.S. Chamber President and CEO Suzanne Clark said solving the worker shortage must be priority No. 1, and in June, the U.S. Chamber and U.S. Chamber Foundation launched America Works, a nationwide initiative mobilizing industry and government to swiftly address America’s deepening worker shortage crisis.
This week, the Bureau of Labor Statistics (BLS), which reports data on job openings across the economy, is out with their latest figures on job openings. The BLSnumbers for the end of May further solidify what we already know to be true about the state of the workforce: There is a record amount of job openings and not enough workers to fill them. (Note: The BLS data has a six-week lag.)
BLS finds that at the end of May there were just over 9.2 million job openings in the economy—mostly steady since the end of April with just a slight increase of about 16,000 openings. This makes sense since businesses added more than 760,000 jobs in March and more than 900,000 in April. Since businesses have not been able to fill these openings, they would not necessarily add more jobs while struggling to fill their existing openings.
The 9.2 million openings in May is an all-time record, smashing the pre-pandemic record by 2 million openings. Since March of 2020, openings have been rising steadily, but they have really accelerated in 2021. In the first five months of the year businesses have added 2.5 million openings, an average of 500,000 per month.
While job openings have been rising, the number of unemployed workers has been falling, to the point where there are now almost as many job openings as there are unemployed workers. There were 9.3 million workers unemployed in May and the 9.2 million openings.
The U.S. Chamber calculates the ratio of available workers to job openings. Available workers includes those unemployed and those looking for work. The ratio was 1.2 in May, the same as in April. It is down considerably from its pandemic high of 5 in April 2020. Prior to the pandemic, the ratio was hovering around 1.
While the ratios are similar, the situation prior to the pandemic was different than the situation we are in now because of the magnitude of the numerators and denominators. Pre-pandemic, there were roughly 7 million job openings and unemployed workers. The major issue was that the available workers did not necessarily have the skills to fill those openings. At the time, it was going to be hard to drop the ratio below 1 because of that mismatch.
Now we have many more available workers, over 11.3 million compared to the 7 million pre-pandemic, and 2.2 million more openings. While some skills mismatches remain, the major problem is that the available workers are reluctant to go back to work, whether because of lingering COVID-19 concerns, childcare issues, or generous government benefits.
The BLS data also sheds light on how easy it is right now to land a job by looking at how many workers are quitting their existing jobs. In May, 3.6 million workers quit their jobs. Almost 4 million quit in April. The quits rate in those months were 2.8 and 2.5 percent respectively. This is historically highly elevated. For comparison, in May of 2020, 2.2 million workers quit their jobs and the rate was only 1.7 percent.
The data suggests that workers are highly confident they can leave their current job for something better, and that there are many good jobs available for the taking.
While the data lags several weeks, we know that the condition of the labor market has not changed much since late May. There are still far too may job openings and if available workers do not fill them it could stifle what should be a booming economy the rest of the year.
Recent Chamber polling revealed that hiring bonuses and other incentives have real potential to encourage unemployed workers to re-enter the workforce. Policymakers at the federal and state level should be working to alter workers’ incentives so that it is more enticing for them to return to work than stay on the sidelines, including following the lead of the 26 states that have ended the extra $300 a week federal unemployment benefits.
Discover workforce solutions, find additional research and analysis, and explore the full America Works policy agenda at uschamber.com/work.
About the authors
Chief Economist, U.S Chamber of Commerce
Curtis Dubay is Chief Economist, Economic Policy Division at the U.S. Chamber of Commerce. He heads the Chamber’s research on the U.S. and global economies.