A notable thing happened in the U.S. workforce in April. For the first time since the Labor Department started to keep track in 2000, there were more job openings than unemployed people. The number of openings hit a record 6.7 million for the month, exceeding the number of jobless by 352,000. On paper, there’s a job for everyone who wants one, and more.
This comes as the marquee jobs number — the unemployment rate — sits at 3.8 percent nationwide, a rate last seen in 2000 and seen only twice in 50 years. The jobless rates for California and Los Angeles are slightly higher, but still near historic lows at 4.2 percent and 4.1 percent, respectively. The unemployment rate measures the percentage of out-of-work people who are actively looking for a job against the entire labor force.
So, we have this unique situation: a low jobless rate, record job openings and more than enough people to fill them. Why aren’t employers hiring the 6.4 million people actively looking for work? I turned to Beth Ann Bovino, the chief U.S. economist for S&P Global in New York, for an answer. “I think a big factor is a skills mismatch.” You’ve probably heard this phrase before. Simply put, it’s the difference between the skills employers are looking for in their workers and the skills the job seekers have.
Usually, when employment is high, job openings are down. Bovino is seeing something different right now. “What we’ve seen is it’s shifted out, and that to us says labor mismatch. Businesses cutting costs and not wanting to pay benefits, that could be part of it. But we think a big factor is skills. That’s really at play here.”
Clearly, we’re in the midst of a new phase of structural unemployment, or unemployment resulting from changing technology. “History has shown that we usually have a structural lag with new technological change,” Bovino said. “People need to catch up with the skills to compete. We’ve seen it before, but the question is, do these people need a little bit of a step-up to be able to work in this environment, or are they going to be left behind?”
Seventy-seven percent of businesses worldwide have indicated they will retrain workers to fit their company needs.
Bovino suggested that “given that many businesses complain that they can’t find the workers they need with the skills that they need, it seems like they’d be very interested in helping with reskilling this workforce that’s fallen behind.” Seventy-seven percent of businesses worldwide have indicated they will retrain workers to fit their company needs, according to one Deloitte survey.
“One of the worries that I think businesses have is that, ‘What if I invest in reskilling these workers, and then they go somewhere else?’ And that’s a tough question,” Bovino said. “An alternative way to look at it is that if a business does invest in that worker, and really give them the skills they need, that worker might be more loyal to the business in the end.
“I’m not an IT specialist, so I’m only speaking as an economist, but I would say that one thing that looks different is that the technological change happens so much faster today than it did 10, 15, 40 years ago.
“It seems like it is happening in seconds, in minutes, versus hours or days or months. And so that might also leave kind of a question for the business of reskilling that worker with the technology he or she needs right now, which might become obsolete in just a few months. That is one little worry that I would have.”
Here’s another thing that worries economists. The unemployment rate measures only the percentage of out-of-work people who actively are looking for work. It doesn’t count people who are employed part time, or those who’ve given up looking for work completely. That’s millions more people who need new training before employers will consider hiring them to fill one of those record 6.7 million openings. We have a very long way to go before our workforce is ready for all the current and future jobs new technology is creating.
Ramona Schindelheim is the senior business correspondent and executive producer for WorkingNation, reporting on jobs, the future of work, and innovative solutions to solving the skills gap. Follow her on Twitter at @RamonaWritesLA.
