The Job Openings Report: A Mix of Hope and Worry

By at 10 November, 2020, 6:58 pm

by Raymond J. Keating-

The latest “Job Openings” report from the U.S. Bureau of Labor Statistics for September 2020 reinforced the idea that the economy is working to slowly recover from the brunt of the pandemic and government shutdowns. There’s much to still be concerned about, but at least one indicator seemed to signal some increased hope on the jobs market front.

First, job openings had been steadily rising from the end of the Great Recession to early January 2019, and then were declining slightly until the pandemic hit early this year. That’s when job openings plummeted in March and April, and subsequently have been working to climb back.

However, it is worth noting that the last two months of data show that job openings in August and September were down from the July level. (See the following two charts.)

Source: Federal Reserve Bank of St. Louis, FRED

As for hires, the same pattern basically held. The decline in hires, again, was drastic in March and April. We experienced a big bounce back in May and June, and then settled in to where things basically were before the pandemic hit. September saw a small decline versus August. That leaves us facing a challenge of still making up for big job losses.

Source: Federal Reserve Bank of St. Louis, FRED

Two key measures worth highlighting from this monthly report are the job openings rate (i.e., job openings divided by total employment plus job openings) and the quits rate (the number of people quitting their jobs as a share of total employment). The quits rate serves as a measure of worker confidence. So, when people are confident in getting another job or have another source of employment available, the quits rate will rise.

The job openings rate declined and partially rebounded with job openings in recent months.

Source: Federal Reserve Bank of St. Louis, FRED

As for the quits rate, it’s rather interesting to see that the recent bounce back has elevated it to a level that was not seen for more than six years after the Great Recession ended.

Source: Federal Reserve Bank of St. Louis, FRED

That recovery in the quits rate would seem to indicate at least some confidence existing among workers regarding the state of the jobs market. We’ll have to wait to see if those expectations are justified.

While the quits rate recovery offers some reason for hope, at the same time, the daunting losses suffered by small businesses, which are the generators of new jobs, raise serious questions and concerns about regaining strong, consistent rates of economic, income and job growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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