Only about 2 out of 10 people are leaving unemployment for work. It should be at least 3 out of 10, former Obama economists say.

• Former Obama economists Jason Furman and Wilson Powell III said only 24% of the unemployed are returning to work.
• One would predict 34% would return, they wrote, resulting in 1 million more unemployed finding jobs per month.
• They said the shortfall is likely temporary and comes down to unemployment benefits and health concerns.

As the economy is beginning to recover from the pandemic, there's a record number of job openings, but that's not the big story, former Obama economists wrote in a paper released Monday.

The big news is that so many of the unemployed are exiting unemployment, but not for jobs. That isn't normal.

Jason Furman, chair of the Council of Economic Advisers under President Barack Obama, and Wilson Powell III, former research economist at the council, released a paper for the left-leaning Peterson Institute, looking into the unemployed who aren't returning to work despite a record number of job openings. It found that since September 2020, transition from employment to unemployment has been lower than the norm, most recently at 24%.

Based on the historic relationship between job openings and the transition from unemployment to employment, they wrote, about 34% of the unemployed in April 2021 should have transitioned to employed in May 2021, resulting in 1 million more unemployed people finding jobs per month.

"This is notable because normally one would expect the transition rate from unemployment to increase as more jobs became available, as measured by the job openings rate," Furman and Powell wrote. "In fact, the current transition rate is closer to what one would expect with an openings rate of 3 percent, only about half of the current openings rate."

The economists added that "at the very least, there is no reason the transition rate should not be around, say, 29 percent, the 80th percentile of its historical value." At that level, an extra 500,000 people would have transitioned from unemployed to employed each month.

So what are the causes of this shortfall?

Insider previously reported that President Joe Biden's $300 weekly unemployment benefits could be disincentivizing the return to work, although COVID-19 health concerns, lack of childcare, and workers holding out for higher wages can't be discounted as other factors.

Furman and Powell wrote that the low transition rate is likely temporary, thought. Similarly, Insider's Ben Winck has reported on the potential benefits of the record number of people quitting jobs, suggesting a future of higher wages for workers and increased productivity.

"The good news is that most of the factors holding back transitions from unemployment are probably temporary, and if the rate at which people are leaving unemployment for jobs returns to what would be expected given the overall strength of the economy, the pace of job growth could rise to 750,000 or more a month," Furman and Powell wrote. "There may be a speed limit on job growth, but it is likely to be well above the recent pace."