MNI: U.S. Staffing Firms Say Job Openings Data Inflated

U.S. jobs openings data is inflated and policymakers shouldn't rely on it as a key guide for the path of interest rate policy, staffing companies and economists at labor market data firms told MNI.

"Duplicate listings, sponsored jobs, and syndication is going on and that has been accelerating in the last five to ten years in the recruitment advertising industry," said Toby Dayton, CEO of LinkUp. "The JOLTS data and the government data unfortunately also has some of those inflated numbers," he said, suggesting it could be inflated by around 2 million openings.

Federal Reserve officials have repeatedly emphasized an ample number of vacancies as a key signal that the job market is too tight. Yet labor market experts cautioned against putting too much weight on such figures.

"Job openings just may not actually mean what they used to mean," said Julia Pollak, chief economist at ZipRecruiter. "You have to really tease out the data and look much more closely to figure out whether these openings are to tread water and fill a hole or whether they are there to build and expand businesses."

SMOKEY INFLATION SIGNAL

John Gulnac, vice president at Adecco, the world's second largest human resources provider and temporary staffing firm, agreed that job openings numbers are inflated but suggested the numbers are artificially higher because firms have posted jobs even before the cost of the position is secured in budgets.

"Sometimes the job openings are not reflective of the true number of openings and from that they are inflated because you will see behaviors out there where people post opportunities proactively," he said.

But job openings have also been cited by Fed officials and the Bank for International Settlements as an important driver of inflation expectations that could push services inflation up and amplify second-round effects. Staffing firms, economists and experts in job advertising pushed back on advertisements as a clear inflation signal.

"I would be hesitant to use jobs as a substitute for meaningful changes in the labor market. Job openings is a signal, but it's not a job, and people have applied to zombie jobs that don't exist," said Nela Richardson, chief economist at payroll processing firm ADP.

"If it is a signal of inflation I would think it would be a tenuous one without a lot more study over a business cycle on how job postings performed," said Richardson, also a member of the Bureau of Economic Analysis Advisory Committee. "I wouldn't throw a lot of weight on that yet. I think its a smoke signal rather than fire."

Fed Chair Jerome Powell Wednesday pointed to the 2 to 1 ratio in JOLTS job openings to applicants as a sign the labor market is overheated, while adding that elevated openings suggest the matching process among employers and applicants has become less effective and means the natural rate of unemployment is higher.

Adecco's Gulnac argued instead the labor market is merely transitioning to have permanently higher openings. "I think we're moving towards making better matches," he said. "We're using a toolkit with technology tools, personality assessments, online matching, and video interviewing that's been dramatically different than the toolkit we had for the prior 60 to 70 years."

SOFTENING DEMAND

Staffing firms also pointed out that their internal numbers have contradicted JOLTS data recently pointing to increased openings, even while there appears to be a slowdown in the labor market.

"There's this question we have when we look at job openings as a demand indicator whether there is a bubble and if it is inflated slightly or maybe a lot because if there was a recession they would be cliff diving right now," said Cathi Canfield of industrial staffing group EmployBridge. "In fact, the opposite is happening in our internal numbers over the last three months."

"We are seeing some slowdown, but I wouldn't say it's systemic across all industries," she added. "We'll really see it as we head into Q4."

Dayton, of LinkUp, a company that indexes job market data directly from employer websites, agreed that he is seeing some slowdown but not recessionary signals for the third quarter even as wages are flattening at still-elevated levels.

"Looking forward, labor demand is trending down but it is still at high levels," Dayton said. "We expect that while the pace of wage growth is slowing down, its still again going to stay elevated as far forward as we can see."