I have some good news, and I have some bad news.
First, the good news: Employers have more job openings today than they’ve had at any time since the Great Recession began.
The bad news: Employers may be posting jobs, but they’re taking longer than ever before to fill them.
It now takes 24 working days for the average job opening to be filled. That’s the longest hiring delay since at least 2001, the first year for which numbers are available, according to a recent report from Dice Holdings based on research by Steven J. Davis, R. Jason Faberman and John C. Haltiwanger. To give you some context, when the recovery began five years ago, the average opening took about 16 days to fill.
This means employers are dragging their feet making hires, despite having 10 million jobless workers to choose from (not to mention many more already-employed applicants looking to job-hop). I’ve spoken to workers who have been called back for as many as nine or 10 interviews for a given position, only to be told at the end of the process that the firm had decided to hold off on making a decision “for now.”
The nation’s biggest companies are being especially poky about filling openings; at firms with at least 5,000 employees, vacancies stay open on average for 69 working days before a successful job offer is made. That’s about twice as long as it took to make hires five years ago, and it doesn’t include whatever additional lag there might be between when the job offer is accepted and when the lucky hire finally starts work.
This hiring paralysis is peculiar. In theory, it should be easier than ever to find talent, thanks to networking and job board sites such as LinkedIn and Monster.com, and to the bevy of start-ups in the personnel analytics space that help screen candidates remotely.
The usual explanation for companies’ interminably long hiring processes is “skills mismatch”: Businesses aren’t filling jobs because applicants are all underqualified.
This is a popular theory, particularly among conservatives, perhaps in part because it suggests that persistent unemployment is mostly workers’ fault and that there’s nothing the government can do to speed up hiring anytime soon. You can’t turn a laid-off auto worker into an E.R. nurse overnight, after all. And we are seeing strong growth in a few highly specialized occupations that involve skill sets that don’t usually go together, according to Burning Glass Technologies, a labor market analytics company. Some companies are “looking for people who can wear multiple hats that don’t usually fit the same head,” Matthew Sigelman, the company’s CEO, told me.
Still, I’m skeptical of the skills mismatch story. If there were massive, country-wide skill shortages, you’d expect to see wages rising as employers bid up the pay of the few desirable workers out there. And generally speaking, you don’t.
Across the board, wage growth has been mediocre, just barely outpacing inflation. Even in construction — where there is allegedly a severe shortage of skilled labor as workers changed careers or returned to their home countries following the housing bust — raises have been pitiful.
My bet is that lingering uncertainty is the real explanation.
“If uncertainty is noise in a vibrant economy, it’s deafening in a subpar growth economy,” says Diane Swonk, chief economist at Mesirow Financial.
Some of this uncertainty is related to paused policy measures and political gridlock; we still don’t know what the housing finance system will look like, for example, and whether we’re soon due for a tax overhaul, or immigration reform, or the employer health insurance mandate.
But the bigger problem is uncertainty about the underlying health of the worldwide economy. Economic growth in the United States has been inconsistent, to say the least; the U.S. economy actually shrank in the first quarter of this year. Geopolitical risks in places such as Russia and Iraq are probably also worrying employers, especially the mega-companies that have been slowest to extend job offers.
Given the risks out there, companies might as well wait to fill an opening until they’re absolutely certain they need someone, or until they find that “purple squirrel” of an impossibly qualified candidate willing to work for impossibly little money. In the meantime, bosses can just dump more work on their staff, since even the most beleaguered workers are still too afraid to quit. It’s a vicious cycle: As long as employers hesitate to fill openings, workers have nowhere else to land; and as long as workers have nowhere else to land, employers can let openings sit fallow.