Washington, D.C., (not pictured) had the biggest mismatch, with total labor demand 6.8% higher than labor supply. Darker colors indicate greater excess demand for labor. The above figure maps out the ratio of labor demand to labor supply for each U.S. However, as the following figure illustrates, 30 out of 50 states (plus Washington, D.C.) had tightness ratios above that level.Įxcess Labor Demand across U.S. Nationwide, labor demand outpaced supply by 2.9% in December 2022 that is, there were about 103 job openings plus employed workers for every 100 workers in the labor force. JOLTS offers state-by-state estimates, which allows us to examine regional variations in labor market tightness. The tight labor market is a nationwide story-as of December 2022, labor demand exceeded supply in every state-but not all states have been affected to the same degree. Labor Force?” Yet even as labor supply has lagged, spending recovered quickly. For more information, see Miguel Faria-e-Castro’s October 2021 Economic Synopses essay, “ The COVID Retirement Boom,” and Victoria Gregory’s February 2022 Regional Economist article, “ Why Are Workers Staying Out of the U.S. Louis Fed economist, has noted that shifts in people caring for family or the home further contributed to movement out of the labor force during the pandemic across all demographic sectors. Louis Fed economist Miguel Faria-e-Castro estimated that there were “slightly over 2.4 million excess retirements due to COVID-19,” and Victoria Gregory, another St. January 2018 was the first month in the history of JOLTS in which the number of job openings was larger than the number of unemployed workers, and this remained the case from March 2018 until the pandemic’s onset in spring 2020.Ī large body of work has examined why the civilian labor force has been slow to recover in the wake of the pandemic. Second, the quantity of labor demand initially surpassed the quantity of labor supply prior to the COVID-19 pandemic. As of December 2022, there were over 5.5 million more job openings than unemployed workers, down slightly from the high of 6.1 million in March 2022. First, labor demand has been exceeding labor supply, and doing so by the widest margins since the inception of JOLTS. The figure below plots this gauge of labor demand against labor supply since 2001. Combining the two measures gives us an approximation of how demand for workers has shifted over time. Collected since 2000, JOLTS is a smaller survey that estimates the number of job openings, hires and separations across the U.S. To approximate the quantity of workers demanded, we can add the total number of employed workers from the CPS to the number of job openings from the Job Openings and Labor Turnover Survey (JOLTS), also conducted by the BLS. Based on this household survey, the BLS categorizes everyone over 16 as “employed,” “unemployed” or “not in the labor force” the labor force is the sum of the first two categories. The civilian labor force, as measured by the Current Population Survey (CPS), can be thought of as the total labor supply. One simple way to measure the pressure for new workers is to compare the total civilian labor force with the total number of employed workers plus job openings. States with the tightest labor markets have seen job openings soar and labor forces shrink, while those with the largest mismatches in the opposite direction have seen sharp declines in job openings (as opposed to larger labor forces). Differences across states show that variations in labor market tightness primarily come from job openings. With output back above pre-pandemic levels, demand for labor is high, and the weight of available evidence suggests that employers are struggling to find workers.Ĭombining certain Bureau of Labor Statistics (BLS) measures allows us to assess total labor supply and demand and examine how labor market tightness varies nationwide. Headline unemployment was 3.4% in January 2023, the lowest rate since April 1969. labor market has been one of the most significant economic stories coming out of the COVID-19 pandemic.
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