Steady job growth has left U.S. employers with an increasingly shallow pool of unemployed workers to consider hiring, something that could lead to faster wage gains.
The number of job postings for each unemployed person fell in March to its lowest level in more than 16 years, according to a report released Tuesday by the Labor Department. This means that businesses may face fewer qualified applicants for jobs and could choose to increase pay in order to attract workers — possibly causing wages to accelerate after several years of sluggish growth.
Employers posted a seasonally adjusted 5.7 million jobs in March, a slight 1.1 percent increase from February. Meanwhile, past hiring gains meant there was a steep decline among the unemployed seeking work during the same period. As a result, there is the equivalent of 1.25 jobless people for each opening — the best ratio since January 2001.
Hiring in March edged up a mere 0.2 percent and is still running below the levels seen in January and December, a sign that employers may not be finding workers.
But more Americans felt confident enough in March to quit their jobs, as the number of quits rose 2.6 percent to 3.1 million. Workers typically quit either when they have another job or are optimistic they can find one — and possibly receive a pay raise.
Along with separate measures that small businesses and construction firms are finding it difficult to hire workers, the increasingly tight job market should help to deliver pay raises, noted Wells Fargo economist Sarah House.
"With a 17-year high share of small businesses reporting jobs are hard to fill, an acceleration in quits would bode well for a pick-up in wage growth later this year," House said in an analysis.
The government said last week that employers added a net total of 211,000 jobs in April and 79,000 in March. But on average over the past three months, employers have added 174,000 jobs a month — an average that economists say is closer to the underlying trend. The unemployment rate dipped a tenth of a point to 4.4 percent.
Those figures are net gains after layoffs, quits and retirements are subtracted from overall hiring.
Tuesday's data come from the Job Openings and Labor Turnover survey, or JOLTS. They are more detailed and provide a fuller view of the job market than the monthly jobs report.