On one hand, this means that elevated openings relative to hires have done more to contribute to inflation on the other hand, it means that as openings come down relative to hires price pressure should moderate.īecause the unemployment rate does not fully capture the pool of potential workers right now-many are coming straight into jobs from outside the labor force or are quitting their jobs to take new ones-the unemployment rate should not be the only indicator policymakers incorporate into their understanding of the labor market. However, we find that inflation appears to be more sensitive to changes in the openings-to-hires ratio than the openings-to-unemployment ratio. ![]() The two ratios-job openings-to-hires and job openings-to-unemployment-have a track record of explaining price and wage pressure. Given labor market dynamics since 2021, getting the openings rate back to a more sustainable pace implies a hires rate in line with the 2015 hires rate but an unemployment rate more than double its 2015 rate. ![]() In this analysis we show that the rate of job openings has been more in line with its historical relationship to the hires rate than its relationship to the unemployment rate. In contrast, while the Beveridge Curve has been moving in the direction of less tightness since July as the number of openings per unemployed has declined, that measure suggests that the matching of workers to jobs has dramatically worsened. The fill rate shows that firms looking to hire large numbers of workers are indeed expanding employment at a rapid pace-because hires are also relatively high firms are clearly finding available workers. The fill rate, on the other hand, suggests less tightness and therefore less need for a substantial softening of the labor market.The openings-to-unemployment ratio (known as the Beveridge Curve) suggests substantial tightness and the need for a much higher unemployment rate to achieve a sustainable and more-typical level of job openings.However, the two measures suggest different gaps between the current strength in the labor market and what a more sustainable level would be: This month’s report shows extremely high rates of job openings based on either the fill rate or the ratio of job openings to unemployment, the labor market is very hot. ![]() This latest readout on the labor market accords with our recent economic analysis highlighting the useful information provided by the fill rate (the ratio of job openings to hires). Earlier this week, the Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS) covering September 2022.
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