Millions of people are still watching this spectacle from the sidelines.
By Wolf Richter for WOLF STREET.
Widespread labor shortages have caused companies to offer higher wages, sign-on bonuses, improved benefits, schedules, and hours. This has the effect that people who already have jobs switch jobs to better their situation. The company that lost the employee now has a job opening and needs to compete in the job market with higher pay, etc. It’s this type of arbitrage by workers in a hot job market that causes wage increases to spread – and employers have raised wages by the most in 20 years – amid record churn.
The number of people who quit jobs voluntarily to work for another company, or to stay home and take care of the kids, or to spend more time with their cryptos, or whatever, spiked by another 164,000 people to a record of 4.43 million in September.
Nearly all of these “quits” (95%) occurred with private sector employers, where quits spiked to 4.22 million, up by 29% from September 2019, which had also been a hot job market. The year 2019 had already seen the highest quits rate in the data going back to 2000. But since March, the power balance between labor and employer, driven by labor shortages, has changed dramatically.
This is not based on online job postings, but on a survey of 21,000 nonfarm business establishments and government entities by the Bureau of Labor Statistics, released today in its JOLTS report.
The “quits rate” in the private sector – the number of quits as a percent of employment – jumped to a new record of 3.4%. It’s a measure of confidence among workers to chase after higher wages and better working conditions, even in a different industry. It’s a sign of aggressive hiring practices by employers to poach workers from other employers:
The highest quits rates were in:
- Accommodation and food services, remained at 6.6%
- Arts, entertainment, and recreation, rose to 5.7%
- Retail, edged down to 4.4%
- Manufacturing of nondurable goods (such as food), jumped to 3.5%
- Professional and business services, remained at 3.3%.
In the government sector, quits rates were the lowest of all industries, though ticking up, with the quite rate at the federal government rising to 0.8% and at state and local governments rising to 1.0%.
Job openings spike in supply-chain-related jobs.
Truck drivers, delivery drivers, warehouse workers, workers in the wholesale trade – those are among the workers that move the merchandise coming down the supply chains. And job openings for them continue to spike. Job openings in manufacturing have also spiked and remain near record highs.
In the Transportation, Warehousing, and Utilities sector, job openings in September jumped to 614,000 opening, up by 73% from September 2019, which had already set a record at the time.
In the Wholesale Trade, job openings jumped by 59,000 for the month, to 320,000 openings, up by 75% from September 2019:
In Manufacturing, job openings rose by 28,000 for the month to 897,000, which nearly matched the record set in July. This sector has been severely hit by shortages of materials and components, including the chip shortages that has hit the vast automotive manufacturing sector very hard. Manufacturers would likely look for even more workers if it weren’t for these shortages that keep production down.
In other industries, job openings near record or dip from records.
In Education and Health Services, job openings rose to 1.88 million, the second highest ever, and up by 51% from two years ago:
In Professional and Business Services, job openings dipped from the record to 1.79 million openings, up 42% from two years ago:
In Healthcare and Social Assistance, job openings jumped to a near record 1.74 million, up 56% from two years ago:
In Leisure and Hospitality, which includes restaurants, bars, hotels, and casinos, job openings fell for the second month, to 1.59 million, down by 17% from the July peak, but still up a blistering 58% from September 2019.
This huge industry offers relatively low wages, often lousy working conditions, and terrible hours such as split shifts and night-and-weekend shifts, and higher risks of infection than many other jobs. Most restaurants in the US are fast-food chains, delis, and cafés. And for those workers, the income is based on relatively low wages and modest tips, if any.
Churn, always high in this sector, remains at extreme levels, with over 860,000 workers having quit these jobs in August and again in September.
But it seems that hefty pay increases – up an average 8% year-over-year, the fastest increase in the data going back to 2004 – are starting to make progress toward bringing people back into the industry.
According to the jobs report a week ago, employment levels in the sector have risen by 1.9 million over the past 12 months but remain 1.4 million workers below the pre-pandemic levels:
In Retail Trade, job openings dipped to 1.12 million, having remained in the same record range for the past four months:
At governments, job openings in September remained flat with August, with a slight uptick in federal job openings (to 139,000 openings) and no change at state and local governments (718,000), after having plunged from the spike in July (for staffing needs at educational institutions):
Total Job Openings dipped in September from August – after a sharper drop in August from the July peak – to 10.44 million openings seasonally adjusted. This is a huge number and up 47% from two years ago.
The jobs report on Friday showed that payrolls at employers were still down by 4.2 million workers from February 2020, and by nearly 8 million from trend over the past 10 years. This is the paradox of the labor shortage: A huge number of job openings (over 10 million) and a still huge drop in the number of working people.
But more people are making the leap back into the working world as employers lure them with better pay packages, but only gradually, and it’s causing a record amount of churn, as shown by the record quits, as workers take advantage of those better offers.
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