The Bureau of Labor Statistics reported this week that job openings reached a new record high of 7.1 million in August, well above the number of unemployed (6.2 million) for the sixth straight month. That means the labor market is tight, right?
Well, not really. The U.S. doesn’t have a single labor market. Gone are the days of Karl Marx’s “working class” of undifferentiated and interchangeable workers. Job titles and workers’ skill sets are becoming ever more specialized.
ZipRecruiter data from July 2017 through September 2018 show that industries fall into three categories: (1) those with moderately tight job markets and some slack, (2) those with very tight job markets and no remaining slack, and (3) those with exceedingly tight job markets and labor shortages.
Tight Job Markets
In the first category are manufacturing, transportation and storage, real estate, tourism, and arts and entertainment. Job markets in these sectors are tight by historical standards and continue to tighten, but there is still considerable slack. The number of job seekers still well exceeds the number of open jobs. Applicants are having to apply to multiple jobs before they are hired, and many employers are able to fill vacancies without raising wages.
Tighter Job Markets
In the second category are business, finance and insurance, education, retail, and construction. In these industries, job markets have tightened considerably over the past year, and there is now around only one job seeker per open job. Job seekers are finding that they have more opportunities than before, and employers are feeling pressure to expand recruiting and retention efforts and raise pay.
The Tightest Job Markets
In the last category are the food industry and especially the healthcare sector. Here, employers are struggling to meet rising demand for their services, and employers cannot fill vacancies fast enough. The number of job openings has overtaken the number of candidates, and it is very much a job seeker’s market.
In the food industry, employers can alleviate labor shortages by raising wages. But in the healthcare sector, the hiring challenges are more severe because some of the causes are structural. Training pipelines are long and occupational certification and licensing requirements can be excessively onerous. As a result, raising wages is far less effective at boosting the number of qualified candidates. Those candidates who do make the investments in training and certifications, however, are likely to see a handsome return.