Gap Between Employment Openings and Number of Workers Being Hired Has Labor Economists Scratching Their Heads

Our New York wage and hour attorneys strive to pay attention to trends in the labor market not only to help our clients understand their situations in context but also to measure the fundamental forces driving employers to raise wages or, conversely, to withhold wages and tips from workers.

To that end, we were fascinated by a powerful New York Times editorial from early December: “Employers Will Have To Raise Wages. They Just Don’t Know It Yet.”

The piece includes some seriously head scratching data from the Labor Department. Reports from October 2014 found that employers had been trying to fill nearly 5 million job vacancies. Curiously, though, the unemployment rate has stagnated; it remains relatively high at 5.8%, and that figure doesn’t even take into account the veritable army of freelancers and under-employed laborers who fly under the radar of these types of statistical analyses.

The number of open positions has gone up substantially since the end of the Great Recession of 2008, but we haven’t witnessed a concomitant boom in hiring. Why?

Maybe we’re just witnessing statistical noise that doesn’t mean much?

Possibly, but consider that the number of open positions has jumped by 125 percent since 2009, but the number of hires is only up 33 percent over that period.

Are employers just being super finicky? Or is there a deeper economic explanation for this anomaly? When analyzing The Bureau of Labor Statistics’ numbers, the New York Times editorial proposed the following theory: “during the recession, employers got spoiled. When unemployment was near 10 percent, talented workers were lined up outside their door. The workers they did have were terrified of losing their jobs. If you put out word that you had an opening, you could fill the job almost instantly. That’s why the ratio of job openings to hires fell so low in 2009. As the economy has gotten better the last five years, employers have had more and more job openings, but have been sorely reluctant to accept that it’s not 2009 anymore in terms of what workers they can hire and at what wage.”

It could also be that employers are genuinely struggling to decide whom to hire… or that new technologies have changed efficiencies in a way that’s reduced urgency to hire. For instance, maybe some employers are using outsourcing or software as effective “stop-gap solutions” for certain labor needs. So while they technically might have positions open, they might not need to fill those positions as quickly as they once did.

The team here at Joseph & Kirschenbaum can help you understand and deal with wage and hour violations, discrimination, harassment, or retaliation by employers. Call us now at (212) 688-5640 or email us at info@jhllp.com for assistance.