Job Openings And Quits Remain Near Record Highs

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by: American Institute of Economic Research

By Robert Hughes

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the number of open positions in the economy was down slightly in September to 7.009 million, just below the record-high 7.293 million in August. Private job openings in the United States totaled 6.407 million in September versus 6.595 million in August. Quits, which may reflect confidence in the labor market, totaled 3.601 million versus a record 3.648 million in August. Nearly all indicators related to the labor market remain strong, suggesting very tight conditions.

The industries with the largest number of openings were professional and business services (1.256 million), healthcare (1.223 million), accommodation and food services (961,000), and retail (756,000). The job-openings rate, openings divided by the sum of jobs and openings, fell to 4.8 percent for the private sector. That is just 0.1 percentage points below the all-time high of 4.9 percent reached in August 2018. The highest openings rates were in accommodation and food services (6.4 percent), healthcare (5.8 percent), and professional and business services (5.6 percent).

Further signs of labor-market strength may be seen in the layoffs rate, which held at 1.3 percent for private employers. While slightly above the all-time low of 1.1 percent, it is well below the 2.2 percent peak rate in 2009. The low layoffs rate is consistent with the multi-decade-low level of initial claims for unemployment insurance. Combined, the high number of openings, the high openings rate, and the low layoffs rate all suggest the labor market remains very tight from the perspective of an employer trying to hire.

From the perspective of workers deciding whether to quit, these data suggest strength as well. The quits rate among private sector employees held steady at a cycle-high 2.7 percent in September (see chart). The high quits rate corroborates the high level of confidence in the jobs market seen in The Conference Board Survey of Consumers. The strong labor market may be contributing to the diverging quits rates among industries. The surging quits rate for accommodation and food service may suggest a higher level of dissatisfaction in the industry, while the falling quits rate for durable-goods manufacturing may reflect higher satisfaction among employees (see chart).

Combining the data on people looking for work with data on those who want a job but haven't looked in the past month and the job-openings data, the number of available people per opening rose slightly to 1.584 in September, just slightly above the record-low 1.538 from July 2018, and just a fraction of the 9.923 people per opening in 2009, just after the end of the Great Recession.

Overall, the data relating to the labor market continue to show strength. Payroll increases appear to be reaccelerating, layoffs remain low, and quits are near a cycle high. The substantial number of open positions in the economy and the low number of available workers per opening suggest wage gains may continue to experience upward pressure. Still, attracting and retaining qualified labor is likely to remain a critical issue for business in the immediate future.