In an op-ed in the Washington Month Peter Orszag, former Obama Director of the Office of Management and the Budget, ponders how with so much continuing unemployment the number of advertised job opening has risen by 50% while actual hiring has only increased by 5%? He suggests four reasons:
- Mismatch between the work that companies need done and the skills that workers have.
- Employers are offering jobs at wages that are too low to attract good applicants.
- The gap between job advertising and new hires reflects the growing use of companies’ “internal” labor markets.
- Companies have reduced their “recruiting intensity.” They advertise jobs but don’t have much interest in filling them.
I think his analysis is good and well worth reading and I suspect that all of those factors are at work to some degree. However, there are two more factors that Dr. Orszag might consider.
It may be the case that companies are unwilling to hire the long-term unemployed. The number of long-term unemployed admitted to by the Bureau of Labor Statistics is nearly 40% of the unemployed. Once you’ve taken into account the large number of long-term unemployed who have given up looking the actual percentage is undoubtedly larger.
It also might be the case that companies are fishing. In my field it used to be common practice both for employers and workers to put out feelers. Employers would advertise jobs with unrealistically high requirements and unrealistically low compensation to see what they’d get. Workers would apply for jobs making absurdly high wage demands to see what was out there.
In a buyer’s market or even what’s assumed to be a buyer’s market employers may be putting out feelers of this kind to see what’s out there, to test the wages they’re offering, and maybe get somebody who’s better for less money. By doing this they’re also bolstering their case that they need to import foreign workers because nobody in the domestic job market has the skills they need.