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When analyzing the labor market, we most commonly focus on the unemployment rate, the number of newly unemployed individuals, and monthly job creation. However, from a slightly different perspective, we can also consider the absolute number of unemployed people and the total number of available jobs out there - and examine the relationship between the two over time.
The attached table shows the values of the ratios in periods before recent recessions (when the ratio is typically at its highest) and after recessions (when the ratio tends to be at its lowest). It also includes the extreme case of the 2022 ratio peak, as well as the current situation.
β€ HOW IS IT USUALLY
The ratio typically falls sharply during recessions and then rises gradually during calmer periods. By the end of a recession, the ratio is usually beaten down to about 0.15 or 0.35, before steadily climbing to between 0.75 and 1.25 in the following years, as observed in recent decades.
β€ COVID PANDEMIC
When examining the chart of this indicator, it becomes clear that the COVID pandemic and subsequent government (and FED) policies in the following years completely ruined the trend. The ratio plummeted from 1.2 to 0.2 in just one month. After April 2020, job openings surged to extraordinary levels, reaching their peak in March 2022. At that point, there were 12,12 million available jobs waiting to get filled, but only 6.01 million unemployed workers, pushing the ratio to an astonishing 2.02 β meaning there were two available jobs for every unemployed person.
Since then, the ratio has fallen sharply, which is typically indicative of a recession. However, it has been declining during a period when the economy was considered to be performing well.
β€ CURRENT SITUATION
Where do we stand now? Honestly, weβre in a very unusual position. The ratio is still relatively high β above 1, which typically signals a healthy labor market - but thatβs also the level it usually reaches right before a recession. However, itβs important to note that the ratio has been falling for the past three years. Drawing firm conclusions from its current movement is difficult, as COVID pandemic and policy interventions have completely disrupted its usual pattern.
One important point to mention here is that both the number of available jobs (7.57 million) and the number of unemployed people (7.08 million) are higher than at any previous pre-recession peak β including those in 2000, 2008, and the one just before the COVID pandemic. It seems the U.S. has both too many people without jobs and too many jobs without people.
β€ WHAT HAPPENS NEXT?
The impact of current policies is also difficult to predict. Although Trumpβs immigration policy changes are not unfolding as quickly as planned, they may still have a significant effect on the U.S. labor market - likely increasing the number of vacant jobs. In contrast, his policies concerning government workers could reduce the number of available jobs while increasing unemployment. To make matters worse, tariffs and a potential recession will likely contribute both to fewer job openings and a rise in joblessness.
What do you think the net effect on the ratio will be, given all of this? Let me know in the comments below.
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Sun Jan 25 2026 06:14:43 GMT+0000 (Coordinated Universal Time)
