A job market with a labor shortage has more jobs than people to fill them. In other words, an industry or economy may be considered short on labor if there are more job openings than there are unemployed people. While labor shortages present challenges for employers, they also tend to correspond with periods of low unemployment.
Is there currently a labor shortage in the US?
Job openings outnumbered unemployed people in the US from May 2021 to December 2023, according to Bureau of Labor Statistics (BLS) data. In December 2023, there were 0.7 unemployed people per job opening.
How many job openings does the US have?
There were 9.03 million job openings in the US in December 2023 according to preliminary BLS data, a 20% decrease from a year prior. That amounts to 5.4% of all nonfarm[1] jobs in the country. As the economy rebounded from the COVID-19 pandemic, the seasonally adjusted[2] rate of vacancies increased from 4.6% in December 2020 to record highs of over 7% in late 2021 and early 2022, but has been generally decreasing since spring 2022. As of December, the job openings rate remains higher than pre-pandemic levels.
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Job openings rate by industry
Some industries have more vacancies than others. In December 2023, 7.7% of jobs in the healthcare and social assistance industry — which includes childcare workers, social workers, and home aides — were open. That’s down from peaks of more than 9% at points in 2022 but still the highest of any tracked industry. Professional and business services (7.0%), real estate (5.9%), and federal government (5.8%) also had higher job openings rates.
Meanwhile, the fields of government education, wholesale trade, and manufacturing of nondurable goods (products are considered nondurable if they have an average shelf life of less than three years) have vacancy rates lower than the national rate.
In December 2023, most industries still had higher rates of job openings than they did before the pandemic, including mining, logging, and oil extraction (up 81% from January 2020); durable goods manufacturing (55%); and educational services (45%).
How many unemployed people are there in the US?
Meanwhile, the nation had 6.12 million unemployed people[3] in January 2024, or 3.7% of the workforce. After a high of 14.8% shortly after the pandemic began, the unemployment rate fell through 2021 and remained between 3.4% and 3.8% from February 2022 through January 2024.
Of the 6.12 million unemployed Americans, 49% had lost a job either temporarily or permanently, 38% were entering or reentering the workforce, and 13% had left a job.
In December 2023, there were 2.76 million more open jobs than unemployed people.
What is the labor force participation rate?
Another measure of the population’s availability to work is the labor force participation rate. This measures the total labor force — everyone who is working or looking for work — as a percentage of working-age people who aren’t active-duty military members or living in institutions[4]. The BLS defines working age as all ages 16 and older, with no upper limit.
During the Great Recession, the American labor force participation rate fell from around 66% to around 63%, where it stayed from late 2013 until the pandemic. After dropping to 60.1% in April 2020, it climbed to between 62% and 63% for most of 2023.
Why are fewer people working?
Reasons for not working vary. In 2014, the BLS found that 44% of people who did not work or look for work were retired, 19% were sick or disabled, 18% were in school, and 15% had home responsibilities keeping them from work.
One explanation for declining labor participation rates is that the share of work-eligible people over the age of 65 has been growing — people over 65 are the most likely not to participate in the labor force due to their higher retirement rates.
How will the population change?
As the nation’s population changes, so will its behavior in the workforce.
The American population continues to grow older as members of the Baby Boomer generation reach the age of 65.
The BLS projects the working-age population to increase by 18.7 million from 2022 to 2032, but expects most of that growth to happen among older demographics. The bureau projects that the segment of that population between the ages of 16 and 34 will decrease by 364,000, the segment between 35 and 64 will increase by 4.7 million, and the segment over the age of 65 will increase by 14.4 million.
With an even higher portion of work-eligible people older than 65, the labor force participation rate is projected to fall to 60.4% in 2032. According to the bureau, more seniors will continue to work, but many won't, and there will be many more seniors than in years past.
With a lower labor force participation rate, the BLS projects the labor force will grow slower than the US population. It projects 3.9 percent labor force growth from 164.3 million people in 2022 to 170.7 million in 2023. This equates to 0.4% annual growth, compared to a projected annual population growth of 0.7%.
How is the unemployment rate expected to change?
By 2032, unemployment is projected to rise to 4.3%.
The number of working people in the US is projected to grow by 4.7 million from 2022 to 2032, from 164.5 million to 169.1 million. This growth would equate to 0.3 percent annually, one-quarter of the 1.2% rate of growth from 2012 to 2022. The BLS bases its jobs projections on the projected growth of the labor force.
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[1] Bureau of Labor Statistics jobs numbers exclude the farming industry because of the challenges presented by seasonality, self-employment, and undocumented work. Data on farming employment is kept by the Department of Agriculture.
[2] BLS data is available with seasonal adjustments, which make it more appropriate to compare data points across months.
[3] Non-working people are considered unemployed only if they do not have a job, are available to work, and have looked for work in the past 4 weeks.
[4] The BLS uses the “civilian noninstitutional population” as the base group for many of its statistical calculations. This population excludes active-duty military and people living in correctional institutions or residential care facilities.
