Friday, November 8, 2013

Job Openings, Job Quits and America's Nervous Workforce

Certainly, the employment situation in the U.S. economy has improved since the depths of the Great Recession, however, as you will see in this posting, the recovery is still rather lukewarm, particularly when one looks at the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics.

Here is a graph showing the total number of non-farm job openings back to December 2000:

Back in December 2000, there were 5.191 million job openings.  As the first recession of the new millennium kicked in, this dropped to a low of 3.085 million in September 2003, a drop of 40.6 percent.  It then began a steady rise to its pre-Great Recession high of 4.707 million in March 2007.  By July 2009, the number of job openings fell to a decade-low level of 2.179 million, a drop of 53.7 percent from its previous peak in 2007 and 58 percent from its December 2000 peak.  You will notice that the drop in job openings during the Great Recession was substantially larger than the drop during the recession of 2001.  Since its nadir in July 2009, the number of job openings has slowly risen to its current level of 3.883 million (preliminary data) in August 2013, still a substantial 824,000 below the pre-Great Recession level.  It is important to observe that since March 2012, the number of job openings has not really increased at all, suggesting that the current employment situation is far from robust.

Here is an interesting graph showing the number of unemployed persons per job opening:

Just prior to the Great Recession, the number of unemployed persons per job opening was 1.8 and was as low as 1.5 during late 2006 and early 2007.  When the recession ended in June 2009, there were 6.2 unemployed persons per job opening, an increase of 413 percent.  In August 2013, there were 2.9 unemployed persons per job opening.  While that is a significant improvement, it is interesting to note that, more than four years into the post-Great Recession recovery, there are still nearly twice the number of unemployed people per job opening than there were for the two and a half years before the Great Recession.

Here is a graph showing the total number of private job openings (in green), hires (in blue) and quits (in red) since January 2003:

You will notice that the number of hires dropped from 5.1 million in mid-2006 to a low of 3.4 million in June 2009.  Since then, the number of hires has risen to 4.2 million, still 17.6 percent below the pre-Great Recession level.  As well, the number of quits which hit 3.0 million in mid-2006 dropped to a low of 1.5 million in September 2009.  Since then, the number of quits has increased to 2.2 million in August 2013 but it is still 26.7 percent below its pre-Great Recession level.

Lastly, let's look at a graph that compares the number of quits to the number of layoffs and discharges:

Since quitting a job is generally a voluntary action, the rate of quitting jobs can serve as a measure of workers' willingness or ability to leave a job for another job opportunity, and, therefore, a measure of the health of the job market.  For most of the 12 years that JOLTS data has been collected, the number of quits (in blue) has exceeded the number of layoffs and discharges (in red).  Between November 2008 and March 2010, the number of layoffs and discharges exceeded the number of quits for the first time since JOLTS data was first collected, showing us how bad the job situation in the United States was during the Great Recession.  While that relationship has reverted to normal since March 2010, as I noted above, the number of quits is still well below what was seen prior to the Great Recession, suggesting that many workers are still very nervous.

Obviously, American workers are a very nervous bunch and rightly so.  No one is going to quit a job unless they are relatively secure in the knowledge that another job is waiting for them and with a smaller number of job openings, particularly in manufacturing, government and construction, the odds of getting another job are diminished.  The only saving grace is the relatively stable size of the U.S. civilian workforce since the beginning of the Great Recession as shown here:

If younger Americans, many of whom have withdrawn from the labor force, decide to return en masse to the working world, the already elevated level of competition for the relatively few jobs that are available will prolong the misery for many of America's unemployed.  

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