Takeaways:
New job postings in January 2021 were 11% more than in January 2020 and 4% more than December (which was already unseasonably high).
Given the relationship between job postings and job openings, we predict that the JOLTS openings figure will be in the neighborhood of 6.8 million.
The US economy continues to demonstrate the COVID paradox: Millions of open jobs, very low labor force participation, and millions of unemployed Americans.
Job ads for online shopping, trucking, and warehousing continue to grow.
Job postings up 11%
There were 2.9 new job postings in January: 11% higher than January last year and 4% above December, which was already an unseasonably high month for postings. Typically, job postings level off or decline over the holidays.
JOLTS prediction: ~6.8M openings in January
To get a better sense of the big story behind these numbers, we want to introduce a new measure this month: a comparison of job postings from Emsi and job openings from the Bureau of Labor Statistics (BLS).
Postings are ads that companies use to find talent, while the number of openings comes from JOLTS, the BLS’s survey estimating the numbers of hires, fires, and open positions in the labor market. Emsi’s job posting data is scraped from the internet and hence available in real time, while the JOLTS number has about a two-month lag due to the time required to run, collect, and release the survey.
Not surprisingly, the numbers of postings and openings often track together. When job postings increase or decrease, the JOLTS number typically follows the same pattern. Thus, the postings figure can help us project where we think overall openings will be each month.
So, based on current trends in job postings, we predict that the number of openings for January will be somewhere in the neighborhood of 6.8 million.
How is this prediction useful? Because if we see postings going up or down in certain areas, that is a good indicator of where hiring will be in 30-60 days. And that is a good indicator of where the economy is headed, because if industries need lots of workers, it is usually a sign that business is good.
In other words, job postings can serve as more than just advertisements. They can also serve as an interesting and powerful leading indicator of the relative health of the economy.
US economy: still struggling
The US economy added added 49,000 new jobs in January, but has recovered only approximately half of the jobs it lost in 2020.
COVID shutdowns really mauled the economy. Gross domestic product (GDP) declined 3.5% in 2020—the worst decline since 1946.
Some experts predict the economy will bounce back to its pre-COVID level by the second quarter of this year. The bad news? Nobody actually knows when the recession will end, and the recession (which began last February) could wind up killing more Americans than COVID, due to potential ripple effects over the next two decades.
COVID paradox: Millions of open positions, record low labor force participation, millions still out of a job
Here’s the persistent pattern in job postings. Doomed industries (like travel, hospitality, oil & gas) are closing shops, shedding workers, and not hiring anymore. Meanwhile, luckier industries (like logistics and healthcare) are publishing more job postings than normal.
It is a split economy. It’s the COVID paradox: Too much work, not enough people, and five million Americans still unemployed.
The oldest and youngest workers suffered the worst. Unemployment drags on longer for older workers than the rest of the workforce since these workers have a difficult time transitioning back into the labor market—at least partially because businesses often can’t afford to hire workers at such high skill levels.
But younger workers also took a disproportionate hit. While workers aged 16-29 make up less than 25% of the workforce, they made up about 33% of unemployment during February-April 2020. A huge reason for this is that the sectors that would typically hire a high-school student or new college grad—retail, entertainment, travel, hospitality—were crippled by shut-downs and restrictions.
There’s actually been a steady decline of young workers in the labor market over the past 20 years, not just during COVID. Back in 2000, 52% of 16-19-year-olds were in the labor market. Today, it’s only 35%. These younger workers—the future of America’s workforce and economy—are missing out on gaining work experience and valuable skills, which could spell long-term damage to everyone.
Fear (and other factors) are driving Americans out of the workforce
So if millions of Americans are out of work, why can’t businesses find the workers they need? Because despite the millions of individuals diligently seeking new jobs, there are four factors driving labor force participation to record lows.
Furloughed workers are still waiting to be called back.
Many unemployed Americans are already raking in $600/week from the federal government (on top of regular state unemployment benefits). So why should they go back to work?
People (especially single-parent households) are not returning to work due to lack of childcare.
Fear. People are simply afraid to go to work.
Online shopping, trucking, and warehousing need tons of workers
Let’s wrap up by looking at just a few of the industries that are knocking it out of the park . . . and others that took the brunt of the blow from COVID lockdowns and social restrictions.
Warehousing & Storage is growing the fastest: 141% more job postings than January of last year before COVID hit, and 105% more postings than December. US warehousing growth was boosted by the explosion in online shopping, but warehousing isn’t growing in America alone. Globally, the warehousing industry is expected to grow from $427B in 2020 to $448B in 2021: an increase of $21B in a single year. This impressive growth will be due mainly to companies restructuring their operations at the same time that they recover from the hampering of the harshest COVID restrictions.
But in terms of sheer numbers of job postings, other industries take the lead. Professional, Scientific, and Technical Services published 370K postings in January, led by companies such as Randstad, Deloitte, and Adecco. Truck Transportation (200K postings), Ambulatory Health Services (186K), Food Services & Drinking Places (144K), and Hospitals (113K) are among the many growing industries in dire need of more people.
Oil & gas is still recovering from the equivalent of a long stretch of quiet Sundays
Oil & Gas Extraction had a mere 1,700 job postings in January: 34% lower than they were before COVID, when restrictions forced many oil & gas companies to slow down or stop operations altogether.
The reason for this is that as retailers, officers, schools, and factories were forced to close, Americans’ need for electricity and gas plummeted. According to the International Energy Agency, it was as if the world entered a prolonged quiet Sunday in terms of energy demands. Given recent policy changes by the White House, job postings for oil & gas might continue to dive.
Accommodation job postings were 41% lower than before COVID, but 28% higher than December’s. Similarly, Air Transportation job postings were 30% lower than before COVID, but 29% higher than December’s. Why are flights still not back to normal? Because people might be vacationing, but business traveling…not so much. The Global Business and Travel Association expects that business travel won’t recover until 2025.
December was, indeed, a uniquely savage month for the leisure & hospitality sector as a whole, which hemorrhaged a half a million jobs in one month. So after that loss, we aren’t surprised to see a comparative uptick in January job postings for accommodation and air transportation. In fact, leisure & hospitality added 35,000 jobs in January, so perhaps things are looking up, but it’s dangerous to bank on that in our volatile economy.
