Job openings plummeted in December, especially for service-sector roles

The December Job Openings and Labor Turnover Survey was pubilshed Thursday by the Bureau of Labor Statistics. It showed 231,000 people filed first-time claims for unemployment insurance last week — a jump of 22,000 from the week prior — and 6.5 million job openings across this economy, down by 386,000 from November.

That’s the fewest openings since way back in September of 2020.

One concern that Mark Hamrick, an economist at BankRate, has about those 6.5 million job openings? “That's substantially below the total number of unemployed persons that were reported by the Labor Department in the most recent employment report.”

Hamrick said it’s the reverse of a few years ago, when there were two job openings for every unemployed worker.

“So we are seeing, I think, now a bit of a misalignment between the supply and demand of and for labor,” he said.

Some sectors seem to be misaligning faster than others, said Tuan Nguyen, an economist at RSM.

“ There was more labor demand for goods-producing sector and less for services sector,” he said.

Less demand for professional and business services, for example, which had over a quarter million fewer job openings in December, compared to the month before.

Nguyen said the growth of artificial intelligence could be one explanation.

“If you look at the broader market, this might be one of the biggest issues that we are experiencing: The fear of AI eating into profit margins and market share of tech companies that are behind on AI adoption,” he said.

Some of those companies might be racing to deploy AI, rather than bringing on new workers.

Pavlina Tcherneva, a professor of economics at Bard College, said it’s too early to tell how much AI is really to blame here. But the hiring slowdown is starting to take its toll on some groups. 

“The labor market is a very challenging place for young people, for young workers. Their unemployment rates are approaching double digits,” she said.

Unemployment for Black workers is rising too. 

“So when you add all of this up together, the conclusion is that the labor market is just not creating enough jobs,” Tcherneva said.

And she said the problem doesn’t seem to be improving. The number of workers unemployed for half a year or longer has nearly doubled in the past three years.