Plenty of Gaps to Fill, Even in a Healthy Labor Market

   

There has perhaps never been a perfect match between the labor market’s demands and the collective skills of its job seekers. They both change over time, and when they don’t line up exactly, the result is that some people are out of work or underemployed.

This issue remains critical in 2016. The labor market is coming off a solid two-year stretch of growth, but federal data show that job openings remain at near-record levels, even while millions of people continue to struggle to find work. This disconnect is highlighted in a pair of recent reports from the U.S. Bureau of Labor Statistics (BLS) and the Aspen Institute, a Washington, D.C.-based think tank.

In a paper titled “Which industries need workers? Exploring differences in labor market activity,” BLS statistician Charlotte Oslund studied the rates of job openings versus hiring rates among major industries from 2014, the most recent data available for a full year. Oslund learned that in 2014, 10 out of 18 industries had higher rates of job openings compared with hire rates.

Why is this important? It may speak to the difficulty that some industries are having in finding qualified workers. It has implications for college graduates when they start their job search and for workers who wish to explore a new career. It could also frame strategies for employers and government agencies when deciding where to channel their training and development initiatives.

“Given that the job openings level is a count of jobs left unfilled on the last day of the month, yet hires is a cumulative count of all employees hired throughout the month, openings outnumbering hires is noteworthy,” Oslund wrote.

Oslund grouped the results from the various industries into five categories:

  • High hires and high job openings.
  • Low hires and high job openings.
  • High hires and low job openings.
  • Low hires and low job openings.
  • Average hires and average job openings.

Industries with both high hires and high job openings were characterized primarily by either economic growth or high turnover. This category included professional and business services— often the leader in job growth each month—and accommodation and food services.

Those with low hires and high job openings included information, finance and insurance, and health care and social assistance. These industries “may not be able to find qualified workers or they might not be offering a wage high enough to attract new employees,” wrote Oslund, who added that these industries “may be of interest to job seekers with the right skills” and to job training programs that prepare people for available employment.

Those with high hires and low job openings included construction, retail trade, and the arts, entertainment and recreation. Oslund said these sectors either have high turnover and an easy time finding replacement workers, or they are in expansion mode and are also filling job openings rather easily.

Sectors with low hires and low job openings included manufacturing, the federal government, and local and state government. Although the sectors in this category collectively employed more than 37 million workers per month in 2014, “very little hiring occurred and open jobs were scarce,” Oslund said.

Measuring the effects of wages and churn—the sum of the hires and separation rates—on these trends would require deeper analysis, Oslund said, and it can be difficult to draw any immediate conclusions. Earnings were the lowest in accommodation and food services, a sector with both high churn and a high number of job openings, but earnings were among the highest in professional and business services sector, which had similar churn and job openings rates.

Helping Younger Workers

This information could be particularly valuable for younger workers, who are facing “their most dire employment prospects in recent history,” according to the Aspen Institute’s recent report titled “Connecting Young Adults to Employment.” For the survey, Aspen officials tallied responses from nearly 400 individuals representing 340 organizations across the United States that provide employment services to young adults (ages 18 to 29).

More than four out of five respondents said their organizations provided resume development (83 percent), job search assistance (82 percent) and interview coaching (82 percent) services. The top three industries identified as “good fits” for young workers were health care, retail and manufacturing.

But the survey also found that there are many barriers associated with connecting younger workers with jobs. They included young workers’ “lack of reliable transportation to and from work,” “lack of sufficient occupational/vocational skills or credentials,” and “lack of sufficient socio-emotional or behavioral skills.”

The answer? Aspen officials cited the need for better connections between the service providers surveyed and the private sector in order to better match the job market’s needs.

“The survey responses also suggest that finding those employment opportunities requires a service provider not only to seek out industries with labor market demand, but also to cultivate relationships with individual employers in specific workplaces that are the right fit for their young clients,” the report said.

Joseph Coombs is a senior analyst for workforce trends at SHRM.

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