Three-quarters of job openings are in Professional Services, while half the industries measured reflect job contractions.
By Manuel Gutierrez, Consulting Economist to NKBA
Although the number of job openings increased by 74,000 in December to reach 6.65 million, it was basically a wash compared to the 60,000 openings lost the prior month.
In actuality, the number of job openings has not changed much recently, as can be seen in Figure 1. The number has hovered in a narrow range between 6.4 million and 6.7 million jobs over the last six months of 2020.
The lack of solid progress in significantly reducing the number of COVID-19 cases continues to impact business and consumer expectations, likely making owners/managers more cautious in their spending. Also, a large portion of the “relief” funds previously released to help households weather the pandemic went to consumers who already hold jobs and have a steady source of income. Many of them no doubt used those funds to increase their savings rather than releasing them into the economy.
Will there be a return to the strong job growth seen in the two-year period from 2018 through 2019? Much won’t be known until the full effect of policies implemented by the new administration are given time to play out. Among these is the new $1.9 trillion aid bill under discussion in Congress.
December’s increase in the number of openings was not broad-based. It was concentrated mostly in one sector, Professional Services. This includes a range of jobs within the legal, advertising and other professional fields.
This sector added 296,000 jobs in December (Figure 2, left panel), or three-quarters of the openings among those industries which posted an increase.
Professional Services contributed over 20% of the total number of openings (right panel in Figure 2), but overall, the category accounts for just 14% of the total number of persons actually employed.
Also illustrated in Figure 2 is that half the industries actually saw openings drop in December compared to the previous month.
Openings and the Unemployed
Two years before the pandemic hit, the economy was booming and for the first time, the number of jobs available exceeded the number of unemployed (Figure 3.)
Businesses at that time were feverishly looking for workers to fill empty spots. At the end of 2019, there were actually over 23% more jobs available than unemployed, or about 1.3 million more job openings than the 5.9 million unemployed. However, the pandemic reversed that equation and today there are 4.1 million more unemployed than the number of jobs available.
