JOLTS Report: flows of openings and hires highlight labor market stresses

JOLTS Report: flows of openings and hires highlight labor market stresses

* The U.S. Job Openings and Labor Turnover Survey (JOLTS) is published with a one-month lag, but it complements the Bureau of Labor Statistics’ (BLS) Employment Report by providing detailed insights into labor market dynamics including job openings, hires, layoffs, and other separations. According to JOLTS job openings in September fell to 10.4 million from an upwardly revised 10.6 million in August, while the number of hires ticked down to 6.4 million (Chart 1). The gap between job openings and hires ticked down to 3.9 million (-150k) but remains near all-time highs, reflecting strong labor demand amid widespread labor supply shortages, contributing to upward pressure on nominal wages and constraining production.

* The quits rate edged up to a record 3.0%, while the private sector quits rate rose to an all-time high of 3.4%, reflecting the confidence workers have in securing new jobs. Scarce labor amid strong demand has contributed to increased wage growth for those switching jobs, which rose 5.4% yr/yr in September according to the FRB Atlanta wage growth tracker. The quits rate in manufacturing edged up to 2.7% (+0.2 pp), while the leisure and hospitality quits rate rose to 6.4% (+0.3 pp) (Chart 2); workers incentivized by wage gains associated with job switching and the increased prevalence of non-wage benefits businesses have begun to offer, are quitting in droves. Elevated quits, particularly in leisure and hospitality, also reflect workers’ concerns over the delta variant and its impact on employment conditions in high-contact in-person industries.

* The number of unemployed people per job opening has soared to a record 1.4, above its level in January 2020 at the end of the longest labor market expansion in history (Chart 3). Nominal wages will need to accelerate to ‘catch up’ to elevated inflation and to incentivize those on the sidelines to rejoin the labor force.

* Job openings fell in construction (-25k), professional and business services (-83k), and leisure & hospitality (-97k), but rose (+141k) in private health care and social assistance. The uptick in job openings in health care and social assistance was matched by a 110k increase in hires reflecting the declining public health burden of COVID-19 on healthcare systems and the ramping up of elective and other health care procedures that were postponed due to the pandemic (Chart 4). Despite the increase in hiring, employment in health care and social assistance remains 600k below its pre-pandemic level.

* Despite strong tax receipts associated with the economic recovery, state and local governments have been slow to rehire educators, while private sector education hiring has also lagged. Hires fell by a combined 180k across public and private sector education, partly reflecting seasonal adjustment factors. Similarly, job openings in private educational services and state & local education fell 45k, and 114k, respectively suggesting hiring likely won’t pick up in the short term.

Chart 1: Job Openings & Hires (millions)

Chart 2: Quits Rate: Total Private, Manufacturing, Leisure & Hospitality (%)

Chart 3: Job Openings per Unemployed Person

Chart 4: Job Openings – Health Care & Social Assistance, Leisure & Hospitality (thousands)

Mickey Levy, [email protected]

Mahmoud Abu Ghzalah, [email protected]

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