The number of job openings has declined sharply in every state

The pre-pandemic balance between unfilled jobs and unemployed people has returned.
A hiring sign is displayed at a retail store in Downers Grove, Ill., Wednesday, April 12, 2023. (AP Photo/Nam Y. Huh)

This story was first published by Stateline.

The number of job openings has declined sharply in every state since 2022, better aligning the numbers of unfilled jobs and people seeking work.

Nationally, for the first time since before the pandemic, the number of job openings and unemployed people is roughly in balance: a little more than one opening per person looking for work, according to a Stateline analysis of U.S. Bureau of Labor Statistics data. At the height of the labor shortage in 2022, there were two job openings per job seeker. As of April, the ratio was down to 1.2 openings per person.

But the proportion of workers to jobs ranges widely from state to state. In California, where layoffs in tech and the film industry have unsettled the job market, there is less than one opening per unemployed person. In North Dakota, where a brain drain has left a shortage of skilled and educated workers, there are almost three openings per unemployed person.

The federal government defines a job opening as an available position that an employer wants to fill within a month.

California, one of the few states where unemployment is above 5% and unemployed people outnumber job openings, has replaced Mississippi as the state with the highest unemployment rate. Washington state and Nevada also have less than one job opening per unemployed person.

The epicenter of the decline in job openings has been California’s Bay Area, including the San Francisco and Silicon Valley metro areas. California ended up losing nearly all the tech jobs it gained during a pandemic boom fueled by online work and shopping.

Vishwanath Eswarakrishnan, a 35-year-old software engineer in the Bay Area, was shocked by his layoff from a San Francisco robotaxi firm in December, a day before the birth of his second child. But as soon as he posted the news to social media, he started getting calls from major firms, including Airbnb, Uber and Nvidia. He accepted an offer from Meta within a month and started work again in March.

“There are opportunities out there for folks with eight to 15 years of experience. You do get calls,” Eswarakrishnan said. He added, however, that friends who have less experience or who work in less technical fields, such as product management, are having a harder time.

In North Dakota, by contrast, there are still almost three job openings for every unemployed person, though that’s down from more than four openings in some months of 2022. Before the pandemic, there were 2.7 openings for every job seeker.

North Dakota suffers from a lack of skilled workers to fill open jobs, and many who could fill them move to nearby cities, such as Minneapolis, looking for a more urban lifestyle and more desirable jobs, said Thomas Krumel, a professor at North Dakota State University who studies labor demand.

North Dakota’s oil boom peaked a decade ago but it left a lasting legacy of high wages and cost of living, he added.

“The positions that employers find most difficult to fill do not require a four-year college degree. Skilled trades, healthcare support and technical jobs often face shortages,” Krumel wrote in an email.

Unemployment nationwide was at 4% in May, higher than the 3.5% before the pandemic but still near historic lows. The only states with unemployment rates above 5% were California (5.3%) and Nevada (5.1%), along with the District of Columbia (5.2%). The lowest rates were in North Dakota and South Dakota (2%), and Vermont (2.1%).

A return to a pre-pandemic labor market is a good sign, said Nick Bunker, economic research director at Indeed Hiring Lab.

“It was a strong labor market, robust and seemingly sustainable,” Bunker said.

However, states with the largest declines in job openings could be in for future trouble.

“We’ve hit the spot now where if employers do continue to pull back on openings, the probability of the unemployment rate rising more sharply becomes higher,” Bunker said.

Of the 10 metro areas with the largest decline in job listings since the beginning of the pandemic, four are in California, according to Bunker’s research. San Francisco (-31%) had the largest decline, followed by San Jose in the Silicon Valley (-28%); Seattle (-27%); New York City (-12%); Boston (-8%); Los Angeles (-6%); Oxnard, California (-5%); Provo, Utah, and Washington, D.C. (-4%); and Buffalo, New York (-3%).

In California, there has been a steep decline in the number of jobs in film and tech, especially supporting roles in sales and recruiting that blossomed in the early pandemic years. Some of the boom in startups was fueled by low interest rates that allowed new tech firms to operate for years before reaching profitability. Higher rates have hit hard.

“Most software is built in startups, with the bulk of the work at the beginning of a business. VC [venture capital] is down and there’s been a flood of talent from big companies that have cut the fat,” said Cody Palmer, a software engineer who does contract work for Silicon Valley companies from Denver. He lost a large contract job this year.

“I’ve been doing this for 15 years and I choose jobs that are hard and high-risk, typically startups,” Palmer said. “I’ve seen, like, 13 layoffs in my career. I’ve grown into this mindset of ‘Always be looking, always try and find the next gig, and be wary of just how fast a job can cut you.’”

The cooling of the labor market without an unemployment spike, at least so far, has surprised some economists.

“It had never happened before, but it did happen,” said Olivier Blanchard, an emeritus economics professor at the Massachusetts Institute of Technology. He co-authored an influential paper in 2022 with former U.S. Treasury Secretary Lawrence Summers predicting that by raising interest rates to curb inflation and cool down an “overheated” labor market, the Federal Reserve would cause a “painful” spike in unemployment.

“Larry and I turned out to be wrong,” Blanchard said.

Other economists such as Andrew Figura at the Federal Reserve argued that a “soft landing” without high unemployment was possible as long as layoffs didn’t spike nationally, as they did in California.

California’s creation of new jobs, the largest in the nation before the pandemic, has now reversed into the largest losses in employment, according to an earlier Stateline analysis. Since 2022, when the Fed first raised interest rates, California has lost 93,000 jobs in the information sector, which includes many internet services and also film and sound recording, according to a March report from the Public Policy Institute of California.

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