PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

JOLTS Report: Tight Market Despite Cooling Trend

By at 4 January, 2023, 11:13 pm

by Raymond J. Keating –

With the start of 2023, there is considerable concern about a looming recession. Keeping in mind that the labor market tends to be an economic laggard, the latest “Jobs Openings and Labor Turnover” report from the U.S. Bureau of Labor Statistics points to a jobs market that remains hot or tight, depending on one’s preferred term, but also one that has cooled a bit.

As noted in the following chart, while job openings still remain well above pre-pandemic levels, they also have been on a downward trend since March 2022.

Source: Federal Reserve Bank of St. Louis, FRED

Another key measure coming out of this report are quits.

Quits are the number of employees who left voluntarily with the exception of retirements or transfers to other locations. This number provides a look at how confident workers are in their ability to land a new job, that is, the tighter the labor market, the higher the number or rate of quits. The following chart again shows quits running above pre-pandemic levels, but coming down from a high in December 2021.

Source: Federal Reserve Bank of St. Louis, FRED

Finally, hires also have been moving downward since February 2022. In addition, in November 2022, hires stood at roughly the same level as the pre-pandemic February 2020 level.

Source: Federal Reserve Bank of St. Louis, FRED

Finally, it’s worth tying these data and trends back to points made in SBE Council’s recent analysis titled “Year in Review & 2023 Outlook: GDP, Inflation, Employment, and Policy.” We made the point that not only was the labor force participation rate among the key working age group of 25-54 years old not back to its pre-pandemic level, but also was down notably from its late 1990s level. For good measure, population growth among this age group “has slowed to a crawl over the past 15 years.”

This points to ongoing labor market challenges until policymakers get serious about immigration reforms that welcome more immigrants who are willing to work and build new businesses.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.

 

 

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