What Is the Unemployed-to-Job Openings Ratio?November 7, 2018 In large economies, there are generally more unemployed people than there are job openings. The number of unemployed to number of job openings can be looked at as a ratio that changes along with economic conditions, with a low ratio suggesting a tight labor market. The U.S. unemployed-to-job openings ratio was as high as 8-to-1 during the worst of the recession, but as of summer 2018 there were about as many job openings in the U.S. as there were unemployed people – a 1-to-1 ratio. In Oregon in summer 2018, there were 1.3 unemployed for each job opening, also well below the ratios seen during the recession.
People become unemployed for all sorts of reasons: through layoffs; by quitting their current job; and through entry to the labor force and the time it takes to find a job once a search begins. People enter the labor market after completing school, or after taking a break from work to care for family or other life happenings, or because they move to the state.
As people search for jobs, they’re competing for a limited number of opportunities. But how limited? We can look at the ratio of unemployed to private-sector job openings since 2000 to get an idea of what is “normal” for this comparison. While Oregon currently has comparable data, the only source with a historical series is for the nation, and comes from the Job Openings and Labor Turnover Survey (JOLTS) produced by the Bureau of Labor Statistics.
It turns out that over the long-run the ratio has averaged three unemployed per job opening. Currently, the nation is at 1.0 unemployed for each job opening, lower than it was prior to the Great Recession that hit at the end of 2007. The ratio has been at this historically low level for the last year.
It took several years after the Great Recession, which officially ended in June 2009, for the unemployed-to-job opening ratio to return to pre-recession levels. The number of unemployed rocketed up to 16 million in early 2010, from a low of 7 million in 2006 and 2007. The low number of job openings also contributed; prior to the recession there were about 4 million job openings and by late 2009 – a little more than two years later – that number had been cut in half to 2 million. With half as many job openings and double the number of people unemployed, the unemployed-to-job opening ratio peaked at 8-to-1 in late 2009. A contrasting trend led to the low ratio in 2018, with the number of unemployed in the U.S. at a historically low 6.4 million in August 2018 and the number of job openings reaching 6.6 million.