Federal Reserve Economic Data

Economists measure labor market tightness as the number of job vacancies per unemployed worker, which is a key factor in monetary policymakers’ decisions.

In the FRED graph above, the blue line shows the seasonally adjusted number of job openings as a fraction of the number of workers in the labor force since January 2020, just before the pandemic. The red line shows the seasonally adjusted unemployment rate. The shaded area shows the onset of the pandemic-related recession, when job postings declined and the unemployment rate jumped to a historically high 15%. But soon after, the unemployment rate declined sharply and job openings became more abundant.

The second graph, below, shows labor market tightness as the ratio of job openings to unemployment. This captures how many job opportunities there are for each person seeking a job. Labor market tightness reached around 2 in early 2022, meaning a very tight labor market with two job openings for each unemployed worker. During this period, many firms faced high demand; as a result, they attempted to hire many workers. Since then, the labor market has cooled significantly, with recent labor market tightness approaching one job for each person seeking a job. This coincides with a general cooldown in demand.

The current labor market is slightly less tight than it was right before the pandemic, though it still remains very tight by historical standards.

How these graphs were created: For the first graph, search FRED for and select “Job Openings: Total Nonfarm (JTSJOR).” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Unemployment Rate (UNRATE).” Finally, adjust the time series to be from 2020-01-01 to 2024-08-01.
For the second graph, search FRED for and select “Job Openings: Total Nonfarm (JTSJOR).” From the “Edit Graph” panel, go to the “Customize data” field and search for “Unemployment Rate (UNRATE)” and click “Add.” Then, in the “Formula” field type a/b and select “Apply” to obtain the ratio of job openings to the unemployment rate. Finally, adjust the time series to be from 2020-01-01 to 2024-07-01.

Suggested by Mick Dueholm and Serdar Ozkan.

The unemployment rate is the highest-profile labor market data point, but there are plenty of other ways to gain additional insight into the job market. One such figure is the ratio of unemployed workers to job openings. It’s a straightforward statistic created by combining two key BLS series: unemployment level (via the Current Population Survey) and total nonfarm job openings (via the JOLTS survey).

Exits from the labor force during the COVID-19 pandemic have been analyzed, with research conducted into the reasons for exits and the likelihood of re-entry. It’s led to some debate as to the true tightness of the labor market— after all, total nonfarm payrolls are still 2 million below January 2020 numbers. This ratio sidesteps all that, giving us a measure of labor tightness that reflects firms’ attempts to hire at the present moment.

After reaching a high of 6.5 unemployed workers for every job opening in July 2009, the ratio fell over the next decade to 0.8 in February 2020. It rose to 4.9 unemployed per job opening during the COVID-19 recession, but has since fallen steadily as economic conditions have improved. As of January 2022, it reached the lowest ratio since the BLS began collecting JOLTS data in 2000: just 60 unemployed workers for every 100 job openings. This aligns with reports of widespread labor shortages across several industries; when looking only at the current labor force, there just aren’t enough job seekers for the current level of positions open.

How this graph was created: Search FRED for “Job Openings: Total Nonfarm” (JTSJOL). Set level in thousands, seasonally adjusted. Combine with “Unemployment Level,” thousands of persons, seasonally adjusted (UNEMPLOY). Divide UNEMPLOY by JTSJOL (formula b/a).

Suggested by Nathan Jefferson.