More jobs than unemployed workers. Will tight labor market boost wages, lure more people into the workforce?

We’ve written of the abundant employment opportunities generated by a strong economy. Today’s report that their are now more jobs available than unemployed workers to fill them underscores that theme, while raising questions about what it means for the economy.

The Wall Street Journal (behind paywall) reports,

For the first time since such record-keeping began in 2000, the number of available positions exceeded the number of job seekers, the Labor Department said Tuesday, a shift that is rippling across the economy and affecting the behavior of employers and workers.

U.S. job openings rose to a seasonally adjusted 6.7 million at the end of April, a record high, and more than the 6.3 million Americans who were unemployed during the month. Openings had exceeded the available labor pool beginning in March, according to revised figures released Tuesday.

One factor to keep in mind is that the “available labor pool” may be understated.

…the share of Americans who are working or seeking work has generally declined for almost two decades. That gives employers fewer potential workers to draw from, but also suggests there remain hundreds of thousands of Americans who could be drawn back into the labor force.

And they may be waiting for better wages.

CNN/Money also considers the sidelined workforce.

A broader measure of unemployment, which includes workers who haven’t looked for a job in the last four months and also those working part-time even though they’d rather work full-time, is still higher than it was in the late 2000s. That means there may still be workers on the sidelines ready to take opportunities that might present themselves.

Those sidelined workers might also be waiting for better offers. While wage growth has picked up since the beginning of the recovery, it’s still only running at about 3% per year, according to the Federal Reserve Board of Atlanta — significantly below the 5% level it reached in the early 2000s.

As the Los Angeles Times reports, the U.S. Labor Secretary remarks on this unprecedented event, also noting that those workers wishing to get in on the opportunities still require education and training.

“Never before have we had an economy where the number of open jobs exceeds the number of job seekers,” Labor Secretary Alexander Acosta said. “This administration is committed to ensuring that all Americans have the necessary skills to access good, family-sustaining jobs.

Analysts are trying to tease out what this means for future growth. The WSJ reports,

… a tighter labor market presents several challenges to businesses. If they can’t find workers to meet the demand for their products, they can’t help the economy grow. They may instead opt to close the restaurant early or not run a third shift at the factory.

Firms may need to pay more to attract workers, and some already are. That raises costs and would cut profit margins if higher prices can’t be passed on to customers. If prices are raised, that stokes stronger inflation, which already has been accelerating in recent months.

Federal Reserve policy makers are watching closely. Emergence of worker shortages and stronger inflation could signal the economy is overheating, raising the need to lift interest rates more aggressively than the slow, moderate path they have signaled.

Overall, abundant opportunities for job seekers seems like a good problem to have. But it’s by no means an unmixed blessing.