Jobs listings have been a historical economic indicator for the health of the labor market and the overall economy.
History of Job Listings
Lots of openings in the local newspaper signals that the businesses are doing well and can afford additional employees that will help grow the company. Meanwhile, a lack of listings can signal that times are getting tough and firms are cutting their workforce to lower costs to help their margins.
These cycles have gone on around the world for years and the tech industry is probably the latest highlight with big tech companies such as Alphabet (GOOG), Meta Platforms (META), Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN) cutting down their workforce by the thousands recently. These massive firms hired tens of thousands during the pandemic as people were quarantined and spending more time online but now these large businesses are cutting back down their workforce as demand for their services has lessened from just a couple years ago.
Thus, many economists will analyze job listing trends on online sites such as Indeed or Glassdoor for indicators on the health of the labor market. However, this analysis has discovered a weird trend by companies, fake or “ghost” jobs that firms are not actually trying to fill.
Schrodinger’s Job
Most would assume that when a company decides to post a job that it means a position is available and ready to be filled. Well that’s not always the case anymore because the cost of actually advertising an available role has reached nearly nothing compared to the past when businesses had to pay for those listing in the newspaper. It costs companies very little to keep a job posting up for months at a time and having available jobs is a bullish signal to workers and investors.
27% of hiring managers reported having jobs posting up for more than four months in a recent survey. Many of those managers said they were not actively trying to fill the position and that they would keep the advertisement up as a signal that the company was growing. One third of the managers who kept them up while not actively trying to fill the position stated that the listing remained to placate overworked or disgruntled employees. Finally, another major reason for the passive listing was to create a pool of ready applicants in case an employee quits or come across a potentially “irresistible” candidate.
The job listing is essentially fake or a ghost listing for job applicants only used to promote the health of the company or keep current employees from demanding too much when they all of a sudden see their position available on Indeed. It’s also extremely difficult to gauge whether a company is really looking for new employees or posting ghost listings, leading to a situation where applicants treat every listing as real and fake before actually hearing back from the employer.
What Does This Mean?
The consequences of this newer trend from employers is that job listing data isn’t as reliable an indicator for labor market and overall economic health unless it can be adjusted in some way. There were still 10.8 million job openings in January of 2023 but at that same time countless large businesses were cutting their workforce and pausing new hires as they dealt with budgetary constraints. Companies have discovered that just having postings online for new work is a great way to signal to investors that they are still growing.
The other outcome of this is that people looking for work have to navigate through the ghost listings minefield and waste their time applying for roles that aren’t available. Luckily for applications, many online postings are easily applied to with saved resume data, so that might be minimal wasted time but is an inconvenience nonetheless.
TLDR, the job posting data needs to be taken with a grain of salt and adjusted for when trying to use it as a measurement for the health of the economy.
