PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Labor Market Snapshot: Workers in the Catbird Seat  

By at 12 October, 2021, 1:29 pm

by Raymond J. Keating –

The latest “Job Openings and Labor Turnover” report from the U.S. Bureau of Labor Statistics makes clear key aspects of the current labor market, including the tight labor conditions being confronted by employers, including small businesses. The data show that the workers who are actually choosing to work sit in the catbird seat.

Job Openings

First, while job openings moved down slightly at the close of August, that was off from a series high registered in July (11.1 million). At the end of August, job openings stood at 10.4 million – again, a towering number in this dataset as noted in the following chart.

Source: Federal Reserve Bank of St. Louis, FRED

Hiring

Second, after moving up gradually and unevenly during the first half of this year, hiring actually has dropped in the past two months, i.e., in July and August. At the same time, the level of hiring still came in on the high side in August when looking at the data over the long run.

Source: Federal Reserve Bank of St. Louis, FRED

Quits and Quits Rate

Third, we should look at the number of quits and the quits rate. Quits are widely considered to be an indicator of confidence among workers in terms of the labor market, or where the labor market is headed. So, a high quits rate reflects the reality or confidence that another job has been secured or is available. In August, the number of quits hit a record high in the series at 4.27 million, as did the quits rate (i.e., the numbers of employees who left voluntarily with the exception of retirements or transfers to other locations as a share of total employment) at 2.9 percent.

Source: Federal Reserve Bank of St. Louis, FRED

 

Source: Federal Reserve Bank of St. Louis, FRED

Labor Force Participation

When you combine this data with the latest information on the labor force – that is, the labor force participation rate remaining very low (See SBE Council’s brief) – we see a market where many people still have chosen not to work. That, in turn, means those who are in the labor market are benefitting from a high demand for workers among businesses and from the fact that a significant number of people are sitting out the job market, for now.

Again, that puts workers willing to work in the catbird seat.

How long that lasts is an open question, not only as more individuals re-enter the labor force but also given the potential negative impact on employment that come with increased taxes and more regulation, if imposed according to President Biden’s wishes.

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

 

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