June 23 2014
Economic Uncertainty and the Hiring Delay
Rachel DiCarlo Currie
Washington Post columnist Catherine Rampell highlights some bad news about U.S. hiring trends:
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.
Rampell considers possible explanations, including the much-discussed “skills mismatch” theory, which holds that American businesses are having a hard time filling job openings because they’re having a hard time finding qualified workers. She is dubious of this theory, however, and for good reason: “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.”
Indeed, as Ben Casselman of FiveThirtyEight observes, inflation-adjusted average hourly wages “are lower now than when the recession ended. Weekly wages haven’t done much better, in part because companies aren’t increasing employees’ hours.”
But if the skills-mismatch argument is unpersuasive, then what does explain the hiring delay? Rampell points to “lingering uncertainty,” not only over the future of U.S. policy, but also over the future course of economic growth both at home and abroad.
Now, it’s very difficult to quantify the impact of economic uncertainty. Yet there is compelling evidence that uncertainty has indeed hindered America’s economic recovery. In fact, a new study by economists Michael Plante of the Dallas Fed, Alexander Richter of Auburn University, and Nathaniel Throckmorton of DePauw University finds “a strong negative correlation between macroeconomic uncertainty and real GDP growth since the Great Recession.”