And More Data Showing a Weirdly Decent Labor Market

But this dynamic makes it harder for young people to find a job.

By Wolf Richter for WOLF STREET.

The spike in job openings in April, reported today by the Bureau of Labor Statistics, was somewhat hefty, to say the least: They jumped by 731,000 in April to 7.62 million openings, the most since May 2024. There had been declines in the prior two months and a spike in January. So we don’t get tangled up in month-to-month squiggles.

But the three-month average jumped too, by 125,000, following the jump in March (+112,000) and the smaller increases in the prior two months. The three-month average has now increased for four months in a row and has changed direction and is now at the highest level since July – and that is meaningful (red line in the chart).

This Job Openings and Labor Turnover Survey (JOLTS) of 21,000 business locations adds more color to the labor market in April after the preliminary jobs report for April, released May 8, already drew a rough sketch of a weirdly decent labor market, with low unemployment, low supply of labor due to the crackdown on illegal immigration, a very high prime-age participation rate, and moderate but sufficient job creation (+115,000, second month in a row of gains).

These job openings are not some fake jobs posted online. They’re based on surveys of HR departments. A job is open only if it meets all three conditions, according to the BLS:

A specific position exists, and there is work available for that position.
The job could start within 30 days.
The employer is actively recruiting workers from outside the establishment to fill the position.

Excluded are positions open only to internal transfers, promotions, demotions, or recall from layoffs; positions for which employees have been hired but have not yet started; and positions to be filled by employees of temporary help agencies, employee leasing companies, outside contractors, or consultants.

JOLTS, as the name says, is a “labor turnover” measure – not a job creation measure (the jobs report released in May did that): How many people quit their jobs, how many were fired or laid off, how many retired, died, or separated for other reasons, how many job openings those people left behind, and how many people were hired to fill those job openings.

Total separations – voluntary or not – have been very low. They plunged in April to 4.98 million, the lowest since the lockdown months, and before then the lowest since 2015 (blue in the chart).

The three-month average dropped to 5.13 million, and has been in this range since November (red).

Total separations consist of voluntary quits (60% of total separations), layoffs and discharges (34% of total separations), and retirements and other separations (6% of total separations). More on them in a moment.

This low rate of separations shows that an unusual equilibrium has spread over the US labor market, which is efficient for employers since they have to fill fewer newly vacant jobs, and save on the costs of the learning curves that new hires have to climb. But it makes it hard for young workers to enter the job

Voluntary quits dropped in April after the jump in March, to 2.98 million, the lowest since September (blue in the chart below). The three-month average fell to 3.06 million (red).

These are people who quit their jobs voluntarily, such as to take a better job somewhere else, but do not include people who retired, died, etc., who are tracked separately.

Quits are the biggest source of the labor market turnover and account for 60% of total separations.

Fewer quits means fewer job openings left behind, and therefore fewer hires to fill those newly vacated jobs.

Layoffs & discharges fell by 192,000 in April from March to 1.69 million. The three-month average ticked up to 1.73 million. These levels are at the lower end of the range of the prepandemic years, so normal.

Layoffs and discharges accounted for 34% of all separations. Getting fired for a variety of reasons, or for no reason, is a standard characteristic of the US labor market.

Retirements and other separations (including deaths, etc.) declined to 310,000 in April. The 12-month average, which irons out the huge month-to-month squiggles, remained unchanged at 304,000 in April, after having come up from the 25-year low last year.

We’re looking at the dynamics of the huge wave of boomer retirements that started a decade ago. Mid-boomers are now 70, and the youngest boomers are now 60, and the majority of boomer retirements is now in the past.

Retirements and other separations account for about 6% of total separations.

The number of hires dropped in April by 419,000 from March, to 5.12 million hires, after the spike in March, the drop in February, the increase in January…

The number of Hires is mostly a function of total separations. Nearly all of these 5.12 hires filled slots left behind by the 4.98 million total separations in April. But 138,000 more were hired than separated, so by this calculus, they were added to nonfarm payrolls.

The jobs report for April, whose preliminary data was released on May 8, showed 115,000 jobs were added to nonfarm payrolls. The revision of the April nonfarm payrolls will be released on Friday, along with the preliminary May figures.

The three-month average dipped to 5.18 million hires. These are low levels of hires. But with so few total separations, there are fewer job openings left behind, and less need to hire people to fill those openings.