December 17, 2017
It is common to look at the ratio of new hires to job openings to get a sense of the tightness of the labor market. The idea is that if there is a high ratio of hires to openings, employers are not having trouble finding workers, whereas a low ratio means that jobs are going unfilled. This means either that employers are unable to find qualified workers, or that they are not willing to offer the market wage for some reason.
The Post had an article about the Trump administration’s plans to reduce the pay and benefits for federal government employees. It notes the arguments of Trump administration economists that federal employees are overpaid. It is worth noting that the ratio of hiring to openings in the federal government is far lower than in the pre-recession period.
The table below shows this ratio for several major sectors in the first six months of 2007 compared with the most recent six months.
| Ratio of Hires to Job Openings | |||||
| Jan-June ’07 | May-Oct ’17 | ||||
| Total Private | 1.16 | 0.93 | |||
| Retail | 1.78 | 1.08 | |||
| Accomodation and Food Service | 1.59 | 1.13 | |||
| Private minus retail &food service | 1.02 | 0.87 | |||
| Health Care & Social Assistance | 0.67 | 0.54 | |||
| Federal Government | 1.61 | 0.42 | |||
| S&L Education | 1.13 | 0.92 | |||
| S&L Other | 0.57 | 0.55 | |||
Source: Bureau of Labor Statistics.
As can be seen the ratio of hiring to openings is just over one quarter of its pre-recession level. This suggests that the federal government is already having a difficult time getting qualified workers given current pay and benefit packages. If it reduces pay and benefits further, then the federal government will presumably have an even more difficult time attracting qualified workers.
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