The number of available jobs on the last day of May slightly climbed to 9.21 million from 9.19 million in April, the Department of Labor reported on Wednesday, July 7. Both were well above the 8.3 million in March, which itself set the record at the time. The previously reported figure for April of 9.3 million had been revised lower.

Job openings had fallen to as low as 4.6 million last year after the coronavirus pandemic briefly shut down much of the economy. The Job Openings and Labor Turnover Survey (JOLTS) started keeping records in 2000. Federal Reserve policymakers closely watch the JOLTS numbers for indications of labor market slack, though they run a month behind.

Jennifer Lee, an economist at BMO Capital Markets, noted that job openings appear to have leveled off, with total postings jumping more than 10 percent in March and April, but barely rising in May.

Lingering effects of pandemic keep many workers on sidelines

The country's economy is on the rise, but the labor shortage threatens to rain on the recovery. Companies can't hire enough new workers to keep up with customer demand while their veteran employees are getting pirated by rivals offering higher pay. Some firms have even had to reject new business opportunities.

"Companies are turning away business because of the labor shortage and that's a shocking move," said Lee.

There was essentially one open job for every unemployed American in May. That situation is far more typical of an economy with much lower unemployment rate. (Related: Nobody wants to work: Labor shortage holds back restaurant industry as states ease pandemic restrictions.)

But the lingering effects of coronavirus (COVID-19) are keeping many potential workers on the sidelines. Some of those out of work are worried about the risk of getting the disease from large crowds, while many older Americans have retired early. The extra $300 in weekly unemployment aid has also allowed Americans to seek out jobs with higher pay rather than return to previous positions that may have paid little.

Economists predict that millions of people who left the labor force during the pandemic will eventually return to work as schools and daycare centers reopen, coronavirus peters out and extra government unemployment benefits expire in September.

Competition for workers give jobseekers the upper hand

The competition for workers has given jobseekers the upper hand. A record 4 million people quit in April – most of them to take a better or better-paying job. That's nearly double the number of people quitting a year earlier. There were 5.32 million people who left jobs in May, including 3.6 million people who quit. The others retired, got laid off or were fired.

Many workers are also leaving jobs for better-paying positions at other companies. "People are moving from one job to the next," said Anthony Nieves, chairman of a monthly survey of service-oriented companies that asks how business is going. The survey is compiled by the Institute for Supply Management.

More people quit when the economy is doing well or they think they can find a better job. The availability of vaccines paired with a broader reopening of businesses has spurred economic activity in recent months, but consumer demand has largely outpaced businesses' ability to hire.

In a race to increase headcount, many businesses have begun raising wages and offering incentives like hiring bonuses to attract applicants. Accommodation and food service job openings increased by 89,000 in May, and by 81,000 in health care. Hiring at restaurants and hotels remained robust. The number of job openings fell in transportation and warehousing, construction and finance.

Job gains picked up in June as employers added 850,000 jobs – the largest monthly increase since August last year. But it would take more than a year at that rate to restore employment to pre-pandemic trends.

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Sources include:

MarketWatch.com

Bloomberg.com