Enormous churn and job hopping amid aggressive hiring, near record low layoffs, near record high job openings and quits.
By Wolf Richter for WOLF STREET.
There have been numerous announcements and reports of hiring freezes at some tech companies, and layoffs at others, including in the crypto and DeFi zone that is now collapsing. But the layoff numbers were small, mostly by startup companies, or some small-scale targeted layoffs at larger companies, not mass-layoffs. And total layoffs across all industries have ticked up just a little from the record lows and remain historically low.
Layoffs in May rose by 77,000 from April, to 1.39 million layoffs, according to today’s Job Openings and Labor Turnover (JOLTS) data. But this was down by 22% from May 2019 and remains in the record low range. By contrast, in the 2011-2019 recovery, there were an average of 1.80 million layoffs per month. And in the 2000-2007 recovery, there were an average of 1.87 million layoffs per month.
Job openings remain in the Astronomical Zone.
At the end of May, job openings dipped for the second month in a row, to 11.25 million, down 5.1% from the record in March, seasonally adjusted. But this was still way up in the astronomical zone, up by 55% from May 2019.
Note, these job openings are not based on online job postings – and therefore not influenced by fake online job postings – but are based on what companies and government entities said their hiring needs were:
This is one more indication that the “labor shortages” continued through May in an extraordinarily tight labor market, despite some small-scale layoffs and some hiring freezes, and that it will take a lot more layoffs and a lot more hiring freezes to loosen up the labor market back to anything resembling “normal.” This may come over the next few months, but it isn’t here yet.
Job openings v. unemployed people looking for a job.
In the years around recessions – from 2002 to 2004 and from 2008 to 2012 – people are losing their jobs and start looking for work, and at the same time, the job openings vanish, and there is a big gap between the unemployed looking for work and actual job openings.
At the peak of the Great Recession in late 2009, there were 15 million unemployed people looking for a job, and only 2 million job openings – which is terrible math for the unemployed.
As the economy improved more job openings appeared, and more people found a slot, and unemployment fell.
Then in the already tight labor market in the years before the pandemic, job openings exceeded for the first time in the data the number of unemployed looking for work, which is what workers want. That’s the sign of a strong labor market.
Since June last year, job openings have exploded, even as the number of unemployed looking for a job has plunged, creating the biggest gap between the two – another aspect of the “labor shortage.”
That gap has been cited by Powell as well – with a historically high 11.25 million job openings and a historically low 5.95 million unemployed people looking for a job in May:
And “Quits” remained near-record highs.
The number of workers who voluntarily quit jobs in May dipped for the second month in a row, to 4.27 million, but was still up by 23% from May 2019, and remains in the astronomical zone, largely reflecting job hopping, as workers “quit” at one company to fill a job opening at another company – and thereby creating a new job opening where they left.
This is a reflection of very high churn in the labor market, as companies are aggressively hiring, offering higher pay and better working conditions, and they are recruiting people who already have jobs, while workers discovered their power in the labor market, and they’re going for the greener grass on the other side of the fence.
Private sector employers hired 6.08 million workers in May, up by 13% from May 2019, and in the same high range since June 2021. Hiring is handicapped by the ability to find qualified people to hire and to entice them away from where they’re working now:
Quits, hires, job openings, and churn.
For the past 12 months, “hires” have been running above 6 million, “quits” have been running at above 4 million, and total job openings in the 11.5 million range.
This relationship between hires, quits, and openings shows that the majority of the 6+ million a month in “hires” filled job openings that had been created by people who quit those jobs and went to work somewhere else.
When a person quits a job at Company A, this company reports it as a “quit,” and if it tries to fill that job again, it reports it as a “job opening.” And when the same person gets a new job at Company B, that company reports it as a “hire” and removes a job opening. Overall, the system reports one “quit,” one “hire,” and no change in job openings, with the opening just shifting to a different company.
That’s churn and has no impact on employment. And there is a huge amount of it now.
Job openings by major category: declining but still far above “normal.”
Professional and business services (includes tech and social media and is the largest category): Job openings fell by 325,000 in May from April, to 2.0 million openings.
Many of the hiring-freezes and layoffs were announced in May and are starting to be reflected in the data. But March had been a huge record for openings in the sector, and that drop leaves these job openings still in the astronomical zone, up by 57% from May 2019:
Healthcare and social assistance: Job openings ticked up a tad in May, after the big drop in April, to 1.98 million openings, up by 60% from May 2019, an indication of continued and frequently reported labor shortages, for a variety of reasons, including due to burnout, inadequate pay, and tough working conditions for nurses and other staff.
Leisure and hospitality: Job openings have backed off from the spike last year but remain very high. In May, they rose by 72,000 to 1.57 million, up by 53% from May 2019.
Retail trade: Job openings rose by 104,000 in May, after a sharp drop in April, to 1.14 million, up by 52% from May 2019:
Manufacturing: Job openings dropped by 208,000 in May, to 809,000 openings, following the spike to a record in April, but they were still in the astronomical zone, up by 74% from May 2019:
Construction: Job openings dipped by 6,000 from the record in April, to 434,000 in May, and were up by 22% from May 2019:
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