The U.S. job market is getting tighter, a trend illuminated most starkly by the low number of job openings, a record low when compared to the number of workers. The average duration of unemployment is another indication. People who lose their jobs and do not immediately start another job can now expect to be unemployed for more than 26 weeks on average. That is significant because 26 weeks is the standard length of unemployment compensation. At the same time, the number of layoffs continues to increase, a sign that employers are still under pressure to cut spending.
The low number of job openings is the opposite of what usually happens in a recession. More often, job openings increase as employers move slowly to fill whatever vacancies come up. Hiring managers spend extra time searching for the perfect candidate for the job, and if the perfect candidate does not appear, they leave the position vacant and try again six months later. Hiring speeds up again when economic conditions improve, and as employers adopt more realistic standards for who they will hire, the openings are eventually filled.
If employers are not taking that approach this time, it shows that they do not expect to be hiring again within the next 18 months. Rather, they are preparing for the possibility of more cutbacks. Businesses, for the most part, cannot borrow money to get through this recession, as they might have done in previous recessions. They have little choice but to cut back as much as their customers do — and that means more layoffs and pay cuts are on the way.
Add in the 2–3 million public sector jobs to be cut in December and January, and we will be looking at the worst job market that most of us have seen in our lifetimes. I am sure economists and politicians will still be talking about the economy bouncing back, as they have been doing every month for the last 27 months, but at that point, the public will not be seeing the economy in those terms.