Job arbitrage in a labor market where workers have a lot more power than before.
By Wolf Richter for WOLF STREET.
Total Job Openings in October rose again, to 11.03 million (seasonally adjusted), up by 50% or by 3.7 million from October two years ago, after slightly dipping in September and August, to nearly match the blistering record set in June, a testimony to the massive labor shortages still dogging many industries across the US.
These job openings are not based on 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.
Hiring was also very strong – by far the best October ever – as companies filled job openings by poaching each other’s employees, offering higher pay, bonuses, and better benefits, leading to both, a large number of “hires” and a large number of “quits,” as people quit their old jobs to take up those better job offers, creating large-scale churn – a form of job arbitrage in a labor market where labor has a lot more power than before.
In Manufacturing, job openings spiked to a record 1.01 million (seasonally adjusted). Compared to October two years ago (2019), job openings were up by 153%, as manufacturers struggled with labor shortages, as much as they struggled with materials and components shortages, such as the semiconductor shortage that has slammed automakers and heavy-truck and equipment manufacturers.
In the Wholesale Trade, job openings rose to a record 329,000 openings (not seasonally adjusted), up by 29% from October 2019:
In Construction, job openings spiked to 410,000, up by 27% from October 2019, and matched the one-month miracle of April 2019:
In Transportation, Warehousing, and Utilities, job openings dipped to 614,000 openings, the second highest ever, and up 79% from two years ago. These sectors include many of the workers that move the merchandise coming down the tangled-up supply chains, such as truck drivers, delivery drivers, and warehouse workers.
In Education and Health Services, job openings jumped to a record 2.0 million, up by 54% from two years ago:
In Professional and Business Services, job openings rose to 1.82 million openings, the third-highest ever, behind July and August, and up 51% from October 2019:
In Healthcare and Social Assistance, job openings jumped to a record 1.82 million, up 55% from October 2019:
In Leisure and Hospitality – includes restaurants of all kinds, bars, hotels, casinos, art & entertainment – job openings jumped to 1.78 million, the second highest ever, and up by 80% from two years ago.
Low wages combined with difficult working conditions, including split shifts, night shifts, and weekend shifts, along with higher risks of infection have made hiring and retaining employees very challenging. Employers have raised wages in response, and they have tried to improve shifts and hours. The industry has always had a lot of turnover, and has even more turnover now.
In October, 887,000 workers quit these jobs, the third-highest after the records in August and September, as workers tried to get better jobs either in the industry or in another industry.
But companies in the sector were able to hire 1.25 million people in October, many of them poached from other businesses in this industry, where these workers are then reported as quits.
In Retail Trade, job openings declined on a seasonally adjusted basis by 18,000 openings to 1.05 million. October and November are the two months when retailers staff up for the holiday selling season. This happens every year, and seasonal adjustments smoothen out those seasonal job openings.
Not seasonally adjusted, job openings in retail rose by 59,000 to 1.24 million, but that increase was smaller than the typical seasonal increase in Octobers, and so the seasonal adjustments reduced that increase to a decline.
Hires: By far the best October ever.
Hiring is very seasonal, driven by large categories such as retail and education that are very seasonal. Despite the labor shortages and the difficulties in hiring people, both seasonally adjusted and not seasonally adjusted hires set big records for October.
Not seasonally adjusted, employers hired 6.86 million people, up by 237,000 from September’s hires, and up by 639,000 from October 2019 (red in the chart below). This was the biggest October ever, easily surpassing the prior record of October 2020 (6.03 million). Employers did this in part by poaching each other’s employees. These poached employees then also show up as “quits” at their old employer.
Seasonally adjusted, employers hired 6.46 million people, also the highest October ever (green line), up by 7.1% from October 2020 and by 11.5% from October 2019. The seasonal adjustments saw to it that the unadjusted 237,000 month-to-month increase became an 82,000 month-to-month decrease (seasonally adjusted).
Job arbitrage: Lots of quits, but not to not work.
The number of people who quit jobs voluntarily either to work for another company, or to do something else, such as starting up their own business, or staying home to take care of the kids, or whatever, dipped by 92,000 in October from the huge September record, to 4.16 million. October quits were the third-highest ever, and were up by 26% from October 2019:
Private sector employers accounted for 95% of these quits, government entities for the rest.
This huge number of quits is a sign of the power of labor, of jobs arbitrage, and of aggressive hiring and staff-poaching amid widespread and large-scale labor shortages that force employers to offer higher wages and other inducements to hire people – often people that already have jobs.
All this boils down to a red-hot labor market, with millions of people having left the labor force for a variety of reasons, and with stimulus driven demand that companies are struggling to meet.
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