The U.S. Labor Market Remains Broadly in Balance

The number of job openings per unemployed person in the United States edged up slightly in May, as job openings unexpectedly climbed to the highest level since November 2024. That doesn't change the fact that the U.S. labor market remains broadly in balance, however, as the ratio of job openings and unemployed persons has come down significantly from its 2022 highs. According to the latest Job Openings and Labor Turnover Survey (JOLTS), 7.77 million positions remained unfilled on the last business day of May, which is only marginally higher than the 7.24 million unemployed in the country.

This means there were roughly 1.07 unfilled positions for every job seeker, clearly showing that the imbalance between labor demand and supply, identified by the Fed as one of the factors that drove inflation in 2022 and 2023, has largely disappeared. Before the pandemic hit in March 2020, there had been 1.2 job openings per unemployed person in an already tight labor market. That indicator then crashed to 0.2 by April 2020 amid mass layoffs in sectors affected by Covid restrictions before climbing as high as 2.02 job openings per unemployed person in March 2022, at the height of the "Great Resignation".

During the inflation crisis, Fed chairman Jerome Powell repeatedly stressed that the labor market needed to balance out to relieve upward pressure on wages and thus cool inflation. In recent meetings, he too acknowledged that balance had been restored and that labor market conditions were currently unlikely to be a source of inflationary pressures.