Over the past three years, a perplexing trend has materialized in the job market: openings have risen nearly 50 percent, but hiring has risen by less than 5 percent. In an op-ed for Bloomberg, CFR Adjunct Senior Fellow Peter Orszag offers explanations.
A popular theory among economists is that this is due to a skills gap—a structural mismatch that began before the recession. Others postulate that employers are offering jobs at wages that are simply too low to attract the applicants they are looking for and that the labor market has yet to adjust to the pressure to increase wage offers. A third explanation is that the gap reflects the growing use of “internal” labor markets within companies, resulting in inaccurate data when companies advertise for a position externally but fill it internally. Orszag concludes that, regardless of explanation, it is good news for the economy that more jobs are being advertised.