Have you ever looked at something and wondered, “something doesn’t seem quite right?” Recent job market data has raised such a juxtaposition. Much of the economic and sentiment data has tapered off indicating weakness ahead, yet Job Openings have remained very high with a recent upturn. What gives?
Formal Job Openings are tracked by the Bureau of Labor Statistics (BLS). Per BLS, “[Job Openings] may include advertising in newspapers, on television, or on radio; posting Internet notices; posting “help wanted” signs; networking with colleagues or making “word of mouth” announcements; accepting applications; interviewing candidates; contacting employment agencies; or soliciting employees at job fairs, state or local employment offices, or similar sources.1” In other words, BLS reaches far and wide to ascertain which companies in what industries are looking for new talent.
Comparing openings to quits may allude to something afoot. In the same report, the BLS discloses Quits data, or the number of people that have decided to leave (quit) their current employers. Monitoring Quits offers insight into employee confidence. Afterall, one is not likely to quit unless they are confident, they will find a new job. Hence, Quits slows as economic weakness approaches. This dynamic has followed past economic relationships for quite some time. While Quits data has followed historic norms, Job Openings has made an about face suggesting economic expansion. Job Openings also contradicts other economic data such as falling industrial production, business investments and moderating consumer spending.
Why is a single data series so problematic? The answer for this possible errant jobs data may be the intent of the hiring companies. Turns out, companies have posted positions without a hiring objective2. Companies have divulged different reasons for advertising positions. They range from 1) giving the impression of a fast-growing company, 2) advertise jobs to placate overworked employees, 3) stockpile a pool of resumes, or 4) just in case2. Recruiters have found this so prevalent that they’ve termed these postings “ghost jobs.”
Such an admission places new light on the Jobs Openings data. Going forward jobs data, specifically Job Openings, will need to be monitored with a bit of skepticism. Let’s hope the Federal Reserve shares the same perspective.
1U.S. Labor of Bureau Statistics