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September 10, 2015

Job openings are up, yet hiring is down

Economists puzzled by market paradox

Job openings have reached record levels – yet actual hiring has fallen.

While Labor Department statistics showed there was a new record of 5.75 million job opens in July, the number of people hired was less than 5 million, The Associated Press reported.

What's behind this paradox?

One possible explanation is that workers do not have the skills and education that employers need, making it difficult for companies to find the right people to hire. As one economist told AP, the data "signals unambiguously that the labor market is unable to supply the people companies need."

Others argue that it's not the workers who are the problem, but the companies that aren't willing to train them.

For example, a study from UPenn's Wharton School pointed out that young workers in 1979 received an average of 2.5 weeks of training per year. A survey in 2011 found that only one in five employees had received any training at all in the past five years.

If businesses continue to struggle to find workers, they may increase wages to become more competitive. However, that hasn't happened yet. The average hourly pay increased 2.2 percent in the past year, compared to a normal growth rate of around 3 percent.