Job market disconnect raises concerns over economic recovery

The gulf between record job openings and a lack of people taking those jobs is forcing Wall Street to reassess the pace of the economic recovery.

Jobs were gutted during the pandemic and employment growth has been a closely watched gauge for investors. Increasing employment eventually results in increased consumer spending, which is the biggest driver of economic growth. Without the former, analysts have said, it will take longer than expected for the economy to operate at some semblance of a pre-pandemic normal.

“That time horizon keeps getting extended,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

The Labor Department has reported that job openings reached 10.9 million in July, the most on record dating to 2000. Yet, there were roughly 8.7 million people considered unemployed during that same month, which is the biggest gap of its kind between available jobs and the unemployed since the Labor Department started keeping track of job openings in 2000.

Typically, the gap is much wider the other way, with more people unemployed then there are job openings.

Rising COVID-19 cases are one of the biggest culprits driving the jobs divide. People are hesitant to head back to work because of health concerns as the highly contagious delta variant spreads, analysts have said. Many are also concerned about childcare as schools open for a new year with a high level of unpredictability because of the virus.

More than 22 million jobs were lost through March and April of 2020 when the pandemic prompted widespread business shutdowns. Roughly 16.8 million of those jobs have returned through July of 2021 in a seemingly swift recovery, but the employment crisis still remains more severe than the recessions of 1974, 1981, 1990 and 2001 were at their worst, according to Ross Mayfield, investment...