Unemployed Finding Work at Above-Average Rate

High demand for labor is resulting in rapid hiring of the unemployed. While the labor force participation rate remains depressed in the aftermath of the pandemic recession in 2020, those that are in the labor market have been able to find a new job relatively easily in recent months.

The chart above shows the number of people who moved from unemployment to employment, divided by the number of unemployed. Or, what percent of the unemployed landed a job. Through June 2021, this ratio was historically low. Potential explanations for the low ratio are factors that may have reduced the necessity of quickly finding a job. For example, the (now expired) enhanced unemployment benefits, the fear of getting infected, school closings, and unemployed workers being more selective. However, in November and December this trend was upended, and the share of the unemployed finding jobs is now well above average. The unemployed are now much more likely to land a job.

This trend should be monitored closely as it may lessen the severity of the ongoing labor shortage.