Here’s something that might be hard to figure out: U.S. job openings reached a record high in July, but hiring has not increased much. What does this tell us about the job market?
First of all, it shouldn’t be too surprising that job openings move more easily than hiring. Creating a job opening is fundamentally a budgeting action. It may involve some paperwork, like writing a job description, but there are few controls on this process. Any job description will serve to hold the place of a job opening. Actual hiring is not nearly so easy. To attract qualified applicants the job description has to mean something. A would-be employer has to consider potential candidates, probably interview several, and ultimately persuade one of the candidates to take the job. This is hard work at least, and there is no assurance that it can be accomplished for any particular job opening. With so many steps along the way, there are hundreds of ways the hiring process can be delayed or derailed.
I’ve written at length about how unrealistic job descriptions can be. Employers routinely require 10 or more rare skills that don’t have any particular tendency to go together, not stopping to think that the ideal worker they are describing might occur only once per one trillion people. Then the proposed salary might be the market rate for a worker possessing just one of the required skills. Some job openings are no more than excuses. Lower-level managers who are told to hire, but who don’t want to do so, can create a whole range of obstacles for job applicants just so they can tell the middle managers they report to, “I can’t find anyone!”
Employers might know they have to offer more money to fill their vacant positions, yet still take time to make the adjustment in the budget. As long as the labor shortage within the company has not reached a critical point, these unfilled positions can remain open indefinitely. Job openings, then, can’t always be taken literally. The existence of a job opening is a sign of a company potentially willing to hire. It is not a gauge of either eagerness or urgency.