Labor Market Showdown: The Employed vs. the Unemployed

Those with jobs are making employment for the unemployed more difficult.

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By SHARE

The number of unemployed Americans is trending downward, and the latest job opening figures paint a hopeful picture for job-seekers. Today, the Labor Department reported that there were nearly 3.5 million job openings in February, up by nearly half a million from one year prior and up 46 percent since the end of the recession in June 2009. Hires were also up, from nearly 4.1 million in February 2011 to nearly 4.4 million this February.

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That sounds promising for the nearly 12.7 million unemployed Americans. However, those workers are set to see increased competition from a very attractive pool of candidates: those who are currently employed.

"What has happened is that as the recovery really took hold, people really became more risk averse. They got more entrenched," says Christoffer Ellehuus, managing director at Corporate Executive Board. Now, with new jobs growing, that cautiousness is abating, and workers are again eying opportunities elsewhere.

According to a recent survey from research and advisory firm Corporate Executive Board, the rate of current U.S. employees actively seeking out new work is up from 20.9 percent in the first quarter of 2011 to 27.3 percent in the first quarter of 2012. Meanwhile, "passive" workers, who are not aggressively pursuing new jobs, have decreased from 52.3 percent at the start of 2011 to 46.6 percent this year.

The latest Labor Department figures also show new movement in the labor market. The number of people quitting their jobs was at nearly 2.1 million in February, up by more than 170,000 from a year ago and roughly 300,000 from June 2009. An uptick in voluntary quits is one indicator of labor market health, as it can mean that workers are either "trading up" for more desirable jobs or are confident enough in the labor market to quit and seek out new positions.

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Ellehuus says that during the recession, even employees with rare or specialized skills chose to stay put. "All the candidates you really wanted, the hard-to-get talent, were actually harder to get during the recession."

Now, he says, with the labor market starting to thaw, other firms are luring those talented employees away from their current jobs.

"That has been the case all along, that people with jobs are better positioned to get new jobs than those without jobs," says Sophia Koropeckyj, managing director of Moody's Analytics. Résumé gaps and loss of job skills can both sully an unemployed candidate's chances. In addition, there are growing concerns about widespread skill mismatches in the labor market—that is, of the jobless not having the necessary skills for the available openings.

These are all reasons why, while thousands of new jobs are created, there isn't a massive shifting of the jobless onto payrolls. Rather, there is also shifting around within the ranks of the employed.

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Compounding the trouble for America's jobless is the fact that the market is not altogether unfrozen. While 27 percent of workers may be actively seeking new jobs, by Corporate Executive Board's count, that total was at 38 percent in 2006, before the recession. And a population of uncertain boomers is contributing to this.

"In the past few years, there's been very low dynamism in the labor market," says Koropeckyj. "Not only because of the bad economy, but the labor market has a high share of older workers who are less likely to leave their jobs, so they're not creating room for new workers."

It all makes for a frustrating atmosphere for the unemployed, but the bottom line is still that there are far fewer available jobs than available workers, says Koropeckyj: "You just need more job creation altogether. Otherwise you're going to have a lot of trading."