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Are labor supply and labor demand out of balance?

Federal Reserve Chair Jerome Powell stated in November 2022 that “job openings exceed available workers by about 4 million.” That number currently stands at 4.7 million after continued strengthening of the labor market.

This mismatch between available jobs and workers to fill them has generated ongoing discussion, and the FRED graph above measures that mismatch in labor supply and demand: The civilian labor force, the amount of people working or looking for a job, is shown in red; the current employment level plus the number of job openings is shown in blue.

If the civilian labor force is greater than employment plus job openings, the economy has immediate capacity to fill open positions. Currently, the employment level plus job openings is at 170.5 million while the total civilian labor force is at 165.8 million. This is the gap of 4.7 million referred to above: that is, there are 4.7 million more jobs available than there are people available to fill them.

The pandemic has been emphasized as a cause of this acute labor shortage, but the trends in labor demand and labor supply in the graph above indicate that demand was already outpacing supply before the pandemic by about 1 million workers.

How this graph was created: Search FRED for “Job Openings” and select the right series. Click “Edit Graph,” search for “Employment levels,” then apply the formula a+b. Next, use the “Add Line” tab to search for and select “Civilian Labor Force Level.”

Suggested by Jack Fuller and Charles Gascon.

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