Job Openings Hit a 2-Year High in October, so What Happened in November?

Employers appeared relatively eager to hire in October, as job openings were the highest since August 2008, according to the Bureau of Labor Statistics. They increased by 351,000 to 3.362 million during the month. Yet, if so many jobs were available as November began, then why was last month's hiring so weak?

Let's look at some charts. First, here are job openings:

job openings 2010-10.png

You can see they ticked up briefly in April, but have otherwise been well below October's number since late 2008. We'll have to wait to see if October was just a blip or if hiring really is ramping up broadly.

Here's another chart showing the number of unemployed Americans per job opening:

unemployed per opening 2010-10.png

This statistic declined steeply from September. In October, the ratio was the lowest since January 2009. Yet, what will this statistic look like for November, as unemployment rose? We know that the number of jobless Americans rose significantly, by 276,000 during the month. So for the number of unemployed per opening to stay at its October value of 4.4 in November, employers will have to add an additional 63,000 openings.

If so many jobs were available in October, why weren't more workers hired? There are a few potential explanations. First, it's possible that we're just seeing a lag here. It may take more than a month or two to fill positions. If that's the case, then we should see significantly stronger job growth in December.

Another possibility is that unemployed Americans aren't trying that hard to find jobs. Unemployment extension opponents would predict exactly this result: job openings are increasing while hiring isn't because seemingly infinite unemployment benefits discourage job seeking. Still, as the second chart above shows, the U.S. labor market is hardly in a situation where there are plenty of openings compared to the vast number of jobless Americans. Even though the ratio has declined, there are still more than four jobless individuals for every opening. It seems a little hard to believe that three-in-four unemployed Americans aren't very eager to work again.

Finally, it's possible that there's a great deal of mismatch between the openings available and the skill set of the jobless individuals looking for work. For example, an unemployed person with experience in construction isn't likely to be much better off if the information technology sector is expanding.You could make a similar argument about regional disparity between openings and unemployed residents.

It's most plausible, however, that all of these explanations are playing a part simultaneously. There is likely some lag, which unemployment benefits have increased since they allow workers to be pickier. Openings aren't likely a perfect match for the experience and location of job seekers.

Note: All statistics above are seasonally adjusted, so holiday hiring is taken into account.