What do job openings tell us about our economy?

Kent Sellers

Regional Workforce Studies Supervisor, Indiana Department of Workforce Development

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Online job advertisements have become a widely used data set in recent years.

Job openings data can be used in many ways to inform our understanding of the labor market and what is happening in the economy.

Economic developers use job openings to determine the economic activity surrounding employers. Workforce development professionals use job openings to project the future workforce of in-demand occupations. Colleges and universities use job openings to determine what career paths these institutions should be training for and if their programs are aligned to fill current and future needs. Academics use job openings in their research, such as examining the demand portion in a skills gap analysis. Job seekers or those deciding on a career to pursue use job openings to understand if there is a demand for their existing career or a potential career path in the future.

Job openings can be captured in a variety of ways. Since there are many different types of stakeholders using the data for a variety of different reasons, it is important to know what the stakeholders are trying to capture in order to select the most appropriate data.

These data have value when understood and used properly. This article explores the different types of openings data and where they are useful, focusing mainly on two types of openings—online job ads/postings and projected openings.

Online job ads/postings

Online job advertisements have become a widely used data set in recent years. This is because job postings offer “real-time” information on what employers are wanting. These unstructured data have also been used to extract other information, such as what skills and certifications employers are looking for.

Typically, private software companies like Burning Glass, Emsi, Help Wanted OnLine, and Chmura will web-scrape online job ads from many online job boards (i.e., CareerBuilder, LinkedIn, Monster, etc.) and big corporate websites that post their own job ads. Next, they will apply methods to remove duplicates, since some employers will post to multiple sites attempting to attract the talent they need. This process is called “de-duplication.” Each company’s method for de-duplicating is proprietary and unique. It should also be noted that de-duplicating methods are not perfect if the multiple ads an employer may post are not similar. Both of these reasons cause the estimates of online job ads to vary depending on the source being observed.

It is also important to know whether the number of ads represents new ads or total ads. New ads count the number of ads that were newly opened in a selected time frame. Total ads count the number of ads that were active in a selected time frame. Total ads would include ads that were opened before but remained active into the selected time frame.

Even in the same time frame and with proper distinguishing between new and total ads, the number of ads can still vary depending on the source used (see Table 1). Please note that there are plenty of other sources of online job ad data other than what is listed. This table is only showing the Indiana Department of Workforce Development sources.

Table 1: Indiana online job ads, August 2018

Source New ads Total ads
Indiana Career Connect (external) 98,153 n/a
Burning Glass 45,896 119,123
Emsi n/a 249,119

Source: Indiana Department of Workforce Development

Because unstructured job ads are not from a statistical program, they come with several caveats. An online job ad does not necessarily equate to an opening as an employer may:

  • Have high turnover in certain jobs, so they collect resumes even though they do not have an active opening.
  • Have more than one job opening being represented in one ad (under-reporting job demand within the data).
  • Not post their opening online (under-representing job demand within the data), e.g., manufacturing and construction.

For these reasons, researchers attempt to steer clear of the term “opening” when referring to online job ads/postings. Online job ads data should be understood as merely a level of online activity that employers choose to engage in to attract talent rather than a complete and accurate picture of the current demand.

Projected openings

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Did you know?

Did you know that the methodology in determining openings have had some significant changes to better capture our changing workforce? Read more about these changes here »

Projected openings come from a partnership program between state labor market information departments and the U.S. Bureau of Labor Statistics (BLS) to produce two-year and 10-year regional and state forecasts, estimating both the industry growth/decline and the amount of openings per occupation. Forecasts are done annually for short-term projections, and bi-annually for long-term projections. These openings take into account the net projected growth of an occupation, exits from the labor force and transfers from one occupation into another occupation.

Projected openings are a statistical measure to project the future demand of jobs that will need to be filled and/or trained for. These do not count every opening an employer may have. They are openings from net new jobs or people that leave the labor force or their existing occupation to move into another. These data should be thought of as the number of openings that measure what the current occupational landscape cannot supply.

Therefore, these openings will need to be filled by people changing occupations, adding an additional job, or those not currently in the labor force (i.e., people that come of working age, finish their education, migrate to the area, etc.). These would be relevant openings to organizations like educational institutions or government officials when looking at the openings from occupations to make sure the supply of trained workers meets the demand of future openings.

JOLTS

JOLTS is an acronym for Job Openings and Labor Turnover Survey. This national survey is a BLS program that produces data on national job openings, hires and separations. JOLTS is a monthly survey that samples approximately 16,000 non-agricultural business establishments in public and private sectors. This survey cannot be broken down by occupation, but it can look at different industries.

These openings are essentially the number of unfilled jobs on the last business day of the month. This is an important measure of the unmet demand for labor. At present, there is no state-level data, but regional estimates are made based on the national data set and can be used to understand potential Midwestern trends.

Best practices

When using online job ads for occupational openings, the audience should:

  • Use these data when trying to estimate the number of current job postings from employers, while keeping in mind that a job posting does not equate to a job opening.
  • Avoid making comparisons across occupations because the data are not equally representative across the labor market.
  • Use the data to supplement traditional labor market information, not as the sole informant of the labor market.
  • If possible, benchmark the number of ads to a more reliable state/national job opening survey, such as JOLTS.

When using projected statistics data for occupational openings, the audience should:

  • Use these data when trying to capture the relevant openings that will need to be filled or trained for outside of our current occupational landscape.
  • Rely on these projections as much as any other projected estimate.
  • Use these data to understand magnitude or net new growth, labor force exits per occupation and level of occupational churn.

Workforce insights

The Indiana Department of Workforce Development (DWD) uses both projected openings and online job ads to inform policy decisions that align workforce-related programs with both real-time and projected occupation demand. Specifically, DWD uses both data sets (in addition to other inputs) to inform the INDemand Jobs ranking methodology, which is used across multiple platforms—Indiana Career Explorer, Indiana Career Ready, Indiana Career Connect, etc. INDemand Jobs focuses on high-demand, high-wage jobs for today and tomorrow. A list of these jobs can be found at www.indianacareerready.com/Indemandjobs.

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