With the labor force participation rate at 62.4%, one of the lowest rates in decades,  a new report on 2023’s States Where Employers Are Struggling the Most in Hiring, shows where people aren’t working as much as they once did.

To see where employers are struggling the most in hiring, WalletHub compared the 50 states and the District of Columbia based on the rate of job openings for the latest month and the last 12 months. For instance in California:

California Hiring Struggle Stats

  • Job openings rate during the latest month: 6.60%
  • Job openings rate in the past 12 months: 6.57%
  • Overall rank: 13th smallest hiring struggle in the country

Why Employers Have Difficulties in Filling Employment Positions

“One reason is that workers have not fully returned to the labor market. For example, the latest data for January estimates a labor force participation rate of 62.4 percent. That number has been slowly improving, but it is still below the pre-pandemic rate of 63.3 percent, never mind the 66.4 percent rate before the Great Recession,” said Raymond J. Keating, chief economist, of the Small Business & Entrepreneurship Council.

“There is currently a labor shortage. This shortage results from two important trends: 1. The labor force participation rate among working-age Americans is low – it has gone from 66.3% in 2002 to 62.4% now. It is unclear why it is low. Perhaps Americans are re-evaluating their willingness to work. Perhaps due to Covid fears. Perhaps to care for their kids more. Perhaps they are suffering from opioid addiction. Perhaps they can live off the benefits they have received during the pandemic and not have to pay for rent yet (if the rent moratorium still holds). But it is not 100% clear why the labor force participation rate is still so low. 2. The population is getting older and older Americans are retiring at an increasing pace. This was accelerated by Covid concerns among the elderly,” said Joelle Saad-Lessler, Ph.D., associate dean of undergraduates, Stevens Institute of Technology.

Main Factors Influencing High Turnover Rates

“My research finds that job hopping from one job to the other has also increased after the pandemic and that this is especially true among low-skilled younger workers. Among job hoppers, we find their wages increase in the new jobs and their hours increase. This suggests that workers are hoping to take advantage of better outcomes. So, it is good news for them. Bad news for employers who have to compete for more for the workers,” Joelle Saad-Lessler said.

“The relatively low unemployment rate makes workers confident they can find another job if they quit,” said Daniel Schwab, assistant professor, at College of the Holy Cross.

Economic Impact of This Trend

“We see the impact in terms of higher wages and increases in core inflation. As wages increase it will draw more potential workers into the labor market. Firms are encouraged to expand the pool of candidates they will consider for a position, reconfigure the position, or simply not fill the vacancy. When successfully hiring new employees, firms often pay higher wages, which encourages them to either pass on the costs to customers through higher prices or adjust to lower the cost of the product or service (e.g., shrinkflation). If wages continue to increase, we may see some potential workers enter the labor market earlier than expected. This is particularly true for younger workers who may eschew additional education to join the labor market,” said Mark Kurt, Ph.D., assistant dean of global education; professor, Elon University.

“The impact is that employers will keep having to raise wages and offer better working conditions to be better positioned to attract and keep their workers. This will keep up the inflation pressure and likely result in more offers of flexible working conditions,” Saad-Lessler said.

Please visit here to view the full report and your state’s rank.

Source: WalletHub