Salient to Investors:

Peter Orszag at Citigroup writes:

Over the past 3 years, the number of job openings has risen almost 50 percent, but actual hiring has gone up by less than 5 percent.

Peter Newland at Barclays says one reason is the mismatch between the work that companies need done and the skills that workers have, and that some loss of employment during the recession was structural, rather than purely cyclical. However this does not explain retain job openings that have doubled over the past 3 years while hiring has been flat.

Alan Krueger at Princeton argues that employers are offering jobs at wages too low to attract good applicants. Krueger says the unemployment rate for the recently out of work is back at pre-crisis levels, and the long-term unemployed exert little downward pressure on wage rates. Krueger said companies have simply not yet adjusted their wage offers. The job-offer rate has risen most sharply relative to hiring for firms with 10 to 250 workers.

A third explanation is that companies often fill openings from within yet advertise such positions externally. The survey counts only jobs filled from outside a company in its statistics on hiring. However, this does not explain why the gap is wider for smaller businesses, because larger companies have more robust internal labor markets.

Steven Davis at the University of Chicago, Jason Faberman at the FRB of Chicago and John Haltiwanger at the University of Maryland argue that companies advertise jobs but don’t have much interest in filling them.

The good news that more jobs are being advertised and that would not be happening if the economic outlook were entirely bleak.

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