According to the Labor Department, job vacancies in July reached record numbers, outnumbering by over 2 million the unemployed. And though the numbers set in July were groundbreaking, the trend seems to have begun months back. In June, companies appeared to be struggling with a massive labor shortage, which saw many of them struggle and fail to attract employees.
Job vacancies by the end of June had reached 10.1 million—a figure that was 6 percent up from May, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS).
The data for both June and July held the record for the highest job vacancies ever recorded by JOLTS. However, these figures were surpassed in September when job openings climbed to 10.4 million, according to the U.S. Bureau of Labor and Statistics.
Job openings in September falling by 191,000 from August, the fall representing the second month in a row where jobs declined in state and local government education (-114,000); other services (-104,000); real estate and rental and leasing (-65,000); and educational services (-45,000).
Compared to hires, the number of hires was 6.5 million, and a rate of 4.4 percent. However, job openings increased in health care and social assistance (+114,000); wholesale trade (+51,000); and Information (+51,000).
So why are job vacancies soaring? When the pandemic hit, and people began working from home while others lost their jobs, it allowed people to reevaluate their purpose in life and whether their jobs fulfilled them. For others, it gave them time to gain the courage they needed to find alternative careers.
And because of these reasons and other contributing factors such as low wage, “the great resignation” began, seeing some 4.3 million Americans in August quit their jobs. That number surpassed the record set in April where about 4 million people resigned from their position.
In September, that number rose to 4.4 million, up +164,000 from August. The rate at which people quit in September was 3.0 percent, up from 2.9 in August.
Historically, resignation has been associated with the level of confidence that workers have in finding employment elsewhere. That, coupled with other psychological stressors such as financial concerns (the inability to pay bills, mounting debt), have also contributed to many employees getting to the point they say, “You know what, my options are changing. I don’t need to live under this cloud anymore,”—according to mercer.
It is interesting to note that in the sectors where there are many job vacancies, the number of resignations is even higher. The health sector is facing an acute labor shortage, partly because of the vaccine mandate that has made it mandatory for health workers to be vaccinated before attending to patients.
According to a Mercer survey done earlier this year, the low-wage, frontline, minority, and lower-level employees are more likely to leave their jobs at rates higher than the norm—especially for those that made less than $60,000 per year.
Despite many factors playing into the labor shortage, it is essential to remember that even before the pandemic hit, there was a labor shortage in the U.S.; the pandemic just exacerbated it. For some economists, the labor shortage has little to do with delta variant concerns or even childcare or pay but is a symptom of a strengthening economy.
“There is an enormous labor shortage in the country right now and it is not just because people are quitting or have childcare problems, or can’t get to work due to the Delta variant,” wrote Chris Rupkey, chief economist at Fwdbonds. “The economy is strong as a bull, that is why there is a tremendous demand for labor.”