Much slower turnover in the labor force leaves fewer job openings to be filled.

By Wolf Richter for WOLF STREET.

Job openings fell in December. But “quits” – a sign of confidence in the labor force – rose for the second month in a row to the most since June; and hires jumped. Layoffs and discharges undid part of the plunge in November and remained historically low. These are signs of slowing churn in the labor force.

This according to the Job Openings and Labor Turnover Survey (JOLTS) of 21,000 business locations. JOLTS doesn’t track employment levels or job creation, but “turnover” – churn – in the labor force. Some of the data were electronically self-reported by companies, and some of the data were obtained via surveys of work sites. This data here are not based on online job postings.

Job openings fell by 386,000 in December to 6.54 million, seasonally adjusted, according to the Bureau of Labor Statistics today. The three-month average, which irons out the month-to-month squiggles, fell by 372,000 to 6.97 million openings and has now fallen visibly below the highs in 2018 and 2019, after hovering near these pre-pandemic highs for over a year (red in the chart).

Job openings are mostly the result of quits, layoffs & discharges, and other separations (retirements, deaths while employed, etc.), all of which are tracked by today’s JOLTS. Only a small sliver, if any, is from job growth, which is tracked by the jobs reports released in January.

Quits – number of workers who quit their jobs voluntarily, such as to take a better job somewhere else, but does not include retirements, deaths, etc., which are tracked separately – rose by 11,000 in December, after the 220,000 jump in November, to 3.20 million (blue in the chart below).

The three-month average rose for the second month in a row to 3.12 million quits (red).

More quits means more open slots left behind that would eventually turn into formal job openings and later into more hires that filled those job openings.

Quits are the biggest source of the labor market churn and account for 61% of all separations.

Turnover in the labor force — how many workers quit voluntarily to work somewhere else, how many were discharged for whatever reason, how many retired or died while employed, etc. – had exploded in 2021 and 2022 during the labor shortages. Those two years of massive churn ended up reshuffling where people worked, with better matches between workers’ skillsets and aspirations and companies’ needs.

Layoffs & discharges rose by 61,000 in December, to 1.76 million, after the drop of 149,000 in November. Getting fired for a variety of reasons, or for no reason, is a classic feature of the American labor market.

The three-month average ticked down to 1.77 million, and has been in this range for roughly five months, all within the lower portion of the pre-pandemic range.

Layoffs and discharges accounted for 34% of all separations.

These low layoffs & discharges – though up from the era of the labor shortages – have been confirmed by other data, including very low unemployment insurance claims.

The ratio of layoffs & discharges to nonfarm payrolls takes into account the growth in employment over the years.

Layoffs & discharges amounted to just 1.1% of nonfarm payrolls, which would have been a record low before the pandemic in the JOLTS data, which goes back to 2001. It’s only during the labor shortages that the percentage was lower.

These relatively low layoffs and discharges translate into relatively fewer job openings, and less hiring to fill those job openings – less churn.

Retirements and other separations (including deaths while employed, etc.) totaled 285,000 in December, at the very low end of the 25-year range.

The 12-month average, which irons out the huge month-to-month squiggles, declined to 296,000.

Retirements and other separations accounted for 5.4% of all separations.

There was a wave of retirements in 2021 and another in 2023, but they were smaller than prior waves of boomers retiring (youngest boomers are about 60, the oldest about 80).

Hires jumped by 172,000 in December to 5.29 million. The three-month average fell by 25,000 to 5.26 million.

Most of these hires replaced workers who’d quit their jobs, or who were discharged or laid off for whatever reasons, and who’d retired, etc. Only a small portion were hired to fill newly created jobs.

For job seekers, the much calmer churn is tough. The low number of quits as workers cling to their jobs, and the low number of layoffs and discharges as companies hang on to their workers, have the effect of creating fewer job openings, and therefore companies don’t need to hire as many people to fill those newly vacant positions.

For employees, it means that there are fewer opportunities to move up. And for job seekers it means that there are fewer newly open slots to slip into. In other words, the labor market has become less dynamic.

This slow churn is one of the reasons job seekers, especially college grads, have a harder time finding a slot.

There are other reasons, especially in tech, such as the use of AI to reduce the amount of entry-level, or-not-so-entry-level work, to be done by humans; and rampant outsourcing of work to India and other countries.

And then there’s the growth in private-sector employment that slowed substantially in 2025, while the federal government, and state governments have shed over 300,000 jobs in 2025 [my analysis: Job Growth in the Private-Sector, Massive Job Losses at Federal & State Governments in H2 2025]

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WOLF STREET FEATURE: Daily Market Insights by Chris Vermeulen, Chief Investment Officer, TheTechnicalTraders.com.