The unusual shape of the Beveridge curve

The FRED Blog has discussed the Beveridge curve, which illustrates the relationship between unemployment and job openings. In short, when the rate of unemployment is high, the rate of job openings is low. And vice versa. A scatter plot showing these paired data points has a very distinctive negatively sloped shape. Today we tap into new research from the St. Louis Fed to tell the story behind the recent numbers shaping the Beveridge curve.

The FRED graph above shows a scatter plot of monthly values of the unemployment and job openings rates, as reported by the US Bureau of Labor Statistics. Between December 2000 and October 2024, the Beveridge curve is more or less shaped like a banana, but with a long tendril during the years of the COVID-19 pandemic. A closer inspection of post-pandemic labor market data, however, shows a steady decline in the rate of job openings and only a modest increase in the rate of unemployment.

Paulina Restrepo-Echevarria and her coauthor studied why the Beveridge curve may have lost some of its shape and found that a growing proportion of job vacancies are filled by workers who are employed by other firms. Hiring currently employed workers is known as "poaching." Since 2015, the fraction of workers poached from other firms to fill vacancies has risen significantly and has been as high as 80% of advertised job openings. The proportion of unemployed workers who have been making their way into existing jobs has gradually declined. Thus, the Beveridge curve is a bit out of shape.

For more about this and other research, visit the publications page of the St. Louis Fed's website, which offers an array of economic analysis and expertise provided by our staff.

How this graph was created: Search FRED for and select "Job Openings: Total Nonfarm." From the "Edit Graph" panel, use the "Add Line" tab to search for and select "Unemployment Rate." Next, use the "Format" tab to select "Graph type: Scatter" from the drop-down menu.

Suggested by Diego Mendez-Carbajo.