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Millions of job openings, so why aren’t companies hiring?

Yahoo Finance
Yahoo Finance

The number of jobs added to the U.S. economy in August came in lighter than expected at 142,000 (analysts were looking for 230,000), according to the Labor Department. Other data reveals plenty of help is wanted, but employers aren't hurrying to hire.

Even though there were 4.7 million jobs openings in June, the most since 2001, employers are waiting longer to fill them than they have in more than a decade, according to an index created by University of Chicago economist Steven Davis.

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It's taking 25 working days on average to fill vacancies, a 13-year high, according to the Dice-DFH Vacancy Duration Measure. And for companies with 5,000 employees or more, it's taking more than twice that long -- an average of 58.1 working days.

In the accompanying video, Davis points to a few key reasons that could explain why. "The economy remains pretty sluggish, so employers don't feel desparate," he tells us. And second, he points to "anecdotal evidence that employers are relying on social media [e.g. LinkedIn] and job banks to identify attractive candidates who are already employed and not actively looking, so that makes for a longer courtship process ... hence it takes longer to fill the job openings they have."

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He also says that policy changes could be involved. By his account there have "been some pretty significant changes in the labor market environment in recent decades, that make employers more cautious about hiring" decisions. As examples, he says there's been an erosion of the employment at-will doctrine in recent decades and he cites the expansion of protected classes of workers. In short, there are more reasons employers can be sued when they let a worker go.

He also says the expansion of tools that can eliminate potential hires, like criminal background checks and credit checks, have enabled employers to be pickier.

Related: 3 more reasons for companies not to hire

So would Davis reccomend any policy change to make it easier for workers to fill these jobs at a time when close to 10 million people are still unemployed? He says he thinks we should consider making it easier for employers to enter into no-risk or little-risk trial employment relationships with workers. That would allow them to hire someone who might not be the ideal candidate and continue the relationship if it works out, but fire them without fear of litigation risk if it does not.

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