The last few months of jobs data from the US Labor Department paint a picture of a tight labor market, with the number of new jobs slowing down as unemployment fell to a long-term low. The department’s latest Job Openings and Labor Turnover Summary (or JOLTS report), released on Tuesday, shows that US employers posted more than 6 million job openings in April—the most since December 2000, when the government began tracking the data—but both hires and quits declined. The puzzling fall in the number of workers quitting their jobs may help explain why wages are not rising as fast as economists would expect in such a tight labor market, the Associated Press reports:
Some economists argue that slower pay raises suggest [employers] may not be so desperate after all. It’s easy to post jobs on a website, but employers may not follow through by recruiting more and offering higher pay. One trend supporting that view is a decline in the number of people quitting, which slipped 3.5 percent to 3.1 million in April. People typically quit when they either find a new job, usually at higher pay, or are confident they can soon find one.
For that number to fall at the same time employers are posting a record number of job openings suggests that not many people are being lured away from their current jobs by other companies dangling attractive pay. In other cases, companies in specific industries may be offering bigger paychecks, but those raises are being offset by other trends. With the workforce aging, higher-paid employees are retiring and being replaced by younger, lower-paid workers, which could depress overall wage growth.
The August Job Openings and Labor Turnover Summary, released by the Bureau of Labor Statistics on Wednesday, shows that nearly 3 million employees quit their jobs voluntarily that month. Economists see this as a sign of labor market strength, Andrew Soergel writes at US News and World Report, indicating that workers feel increasingly sure of getting a new job:
“Optimism continues to build over the near-term hiring outlook,” Sam Bullard, a senior economist and managing director at Wells Fargo Securities, wrote in a research note last month, noting that “labor market conditions have been supportive to the recent increase we have seen in confidence and consumer spending growth.”
Quits have been consistently high all year as the labor market continues its record-setting run of job creation. American employers generated 156,000 new jobs last month, according to a separate report the bureau released Friday, and have ginned up more than 1.6 million additions so far this year. And with more newly created positions and a consistently high number of job openings, domestic employees have plenty of options if they opt to leave their current positions in search of new ones. Job openings fell back slightly in August after coming just shy of an all-time high in July, but employers were still actively recruiting for more than 5.4 million vacancies.
Meanwhile, more than 5.2 million workers were hired in August – which makes it the third-best month for new hires so far this year. Professional and business services brought on more than 1 million new workers, while health care and social assistance outfits accounted for 542,000 additions.
The latest JOLTS data comes amid other encouraging indicators in the US labor market.
Strong jobs reports in June and July have done much to calm fears that the US economy could head into a recession this year. The Job Openings and Labor Turnover Survey for June, just released on Wednesday, gives more detail about the labor market and appears to confirm the story of fairly steady economic growth, the Associated Press reports:
The number of job openings rose a modest 2 percent to 5.6 million in June from 5.5 million in May, the Labor Department said Wednesday. Still, that figure remains below the 5.8 million openings advertised in April, the highest on records going back 16 years. Hiring increased 1.7 percent in June to 5.1 million, a solid level but below a recent peak of 5.5 million in February.
Businesses are hiring at a healthy pace even as economic growth has lagged, in part because the workforce has become less productive. The economy expanded at an annual rate of just 1 percent in the first half of the year, though analysts expect growth to accelerate to about a 3 percent annual rate in the current July-September quarter. … “We see no sign of any downturn, suggesting employers remain fundamentally bullish,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, a forecasting firm.
It’s not all good news, though. Andrew Soergel at US News and World Report notes that “a sizable chunk of June’s openings were concentrated in what are often low-paying service industries”: