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The Beveridge curve is a tool used by economists to chart the health of the labor market. It compares the job vacancy rate with the unemployment rate.
Typically, the line slopes downwards from left to right. The high end of the curve on the left indicates the combination of a low unemployment rate and a relatively high job vacancy rate. The low end of the curve on the right indicates a high unemployment rate and relatively low job vacancy rate.
Read on to learn whether the Beveridge Curve can warn of a coming surge in unemployment.
Key Takeaways
- The Beveridge curve charts the relationship between the job vacancy rate and the unemployment rate in a labor market.
- Typically, movement along the curve represents phases of the economy: from recession to expansion. A shift in the entire curve represents massive changes in the efficiency of labor markets, or the ability to match unemployed people to available jobs.
- Many fear that with a rising unemployment rate and rising job vacancy rate, the Beveridge curve is shifting outwards again in the United States, much like it did during the pandemic; this could signal higher unemployment down the line.
How the Beveridge Curve Works
On a stationary Beveridge curve, you can chart a labor market as it cycles through expansion (lower unemployment with a higher number of vacancies) to recession (higher unemployment with a lower number of vacancies). However, when the entire curve shifts, it represents a change in the efficiency of the job-matching process.
Say, for example, the whole curve shifts to the right. This indicates a higher unemployment rate and a static job vacancy rate. That means there is a macroeconomic phenomenon that keeps employers from filling jobs. Some recent examples of such phenomena include the COVID-19 pandemic and the Great Resignation.
If the entire curve shifts to the left, the job vacancy rate is dropping while unemployment remains relatively steady. In this case, the labor market is operating in a more efficient manner. It’s better able to match job seekers with job offerings.
In addition to right and left shifts, the Beveridge curve can shift in other ways. For instance, it can shift outward, which would indicate movements to higher levels of both unemployment and vacancies.
Shifts on the Horizon?
Some economy watchers have noticed that while unemployment rates are rising, so too are job opening rates. This signals a shift outward of the Beveridge curve, much like what was seen during the pandemic, as noted above.
“When the curve shifts outward, it’s a red flag,” explains Louis Carter, CEO and founder of the organizational theory think tank, the Best Practice Institute.
“That usually means something deeper is wrong, like people don’t have the right skills, or the jobs are in places they can’t get to if it is not a fully remote position. Economists pay close attention to these shifts because they often point to bigger trouble ahead. It’s not just a slowdown—it’s the labor market starting to erode.”
If the curve really is shifting outwards, this could foreshadow a spike in unemployment in the near future, given that there has been a decrease in the ability of the labor market to match eligible workers with job listings.
A 2025 Reddit conversation about the Beveridge curve aligns with this worry of an impending increase in unemployment.
The New Labor Economy
Not all labor market shifts are created equal, though. For example, some believe that the perceived shift outward in the Beveridge curve is due to the rise in ghost jobs, or companies posting positions that don’t actually exist—something that 40% of companies admit to doing.
Others believe it could be an issue with the post-COVID-19 workforce adjusting back to pre-COVID-19 standards. Some people have moved away from major urban areas and are mainly looking for remote work, while companies increasingly want people back in the office.
“It’s reasonable that this would have a massive labor market impact,” explains Mike Konczal, the senior director of policy and research at the Economic Security Project.
He notes that, according to the 2025 Economic Report of the President, 20% of the American workforce working partially or fully remotely is approximately twice the number of workers who are unionized.
However, more serious labor market frictions, such as the rise of artificial intelligence, could pose a larger risk for a sustained spike in unemployment.
The Bottom Line
Can the Beveridge curve signal a future surge in unemployment? It remains too early to tell if the labor market is undergoing another dramatic shift, as it did during the pandemic and the Great Resignation period.
Before the second Trump administration began, many believed that the Beveridge curve was moving back to its normal position. But recent macroeconomic changes and jobs data have upended that line of thinking.
Economists will have to keep an eye on vacancy rates, unemployment rates, and macroeconomic disruptors such as artificial intelligence to see if the Beveridge curve—and indeed, the entire labor market—is being rewritten right now. If it is, that means we might expect high unemployment in the near future.
