Still lots of churn as workers arbitrage the tight labor market for their benefit. Back to “normal” a long way off.
By Wolf Richter for WOLF STREET.
Job openings fell but remained historically high. And this is not based on wishful-thinking job postings, but on surveys sent to 21,000 businesses about their actual workforce details. Actual hiring dipped, but remained well above the pre-pandemic record. Layoffs and discharges dropped again, and were well below the pre-pandemic record low. Voluntary quits – workers going for a better job – rose again and are still in the astronomical zone.
It’s astonishing how this labor market just keeps on going like this, despite the higher interest rates, high inflation, turmoil in banking, and the sell-off in the markets since November 2021. And it explains why consumers are still not slowing down. Or vice versa.
Job openings – as reported by companies, not online job postings – fell in February, but remained historically high and was still up by 31% from the pre-pandemic peak set in November 2018. The 9.93 million job openings in February were well above the Good Times range before the pandemic of around 7.2 million openings.
Companies overall have cut back their open positions from ridiculously high levels to just very high levels – that’s what this data shows that the Bureau of Labor Statistics released today as part of its Job Openings and Labor Turnover Survey (JOLTS).
In the tech and social media segment, and to a lesser extent in some other segments, hiring freezes and layoffs have decimated job openings. CEOs of tech and social media companies have admitted that they overhired during the pandemic, and they’re now undoing a portion of it. Some companies added hundreds of thousands of people in two years, and they’re now trimming tens of thousands.
Job openings in the “Information” sector rose in February for the second month in a row, but are way down from the peak last year – yet, still in the mid-rage of the Good Times before the pandemic.
The startup bubble has imploded, funding is drying up for cash-burn machines, and in order to lengthen their runway before they get to the out-of-money date, many of these startups slashed their job openings and their actual staff. Some have filed for bankruptcy already or just shut down. So the bloom is off the bubble.
Other sectors and companies have their unique conditions. For example, in the construction sector, job openings jumped to near-record highs. At automakers, layoffs and voluntary buyouts at their internal-combustion-engine divisions contrast with massive hiring and job openings at their new EV divisions. Many companies that have been desperately trying to hire tech workers now have a slightly easier time doing so.
Actual hiring dipped in February but remained historically high, and well above pre-pandemic records, with companies reporting 6.16 million new hires in February:
Actual layoffs and discharges fell again to 1.50 million, a near-record low and well below the pre-pandemic record low. These are not announcements of layoffs by global companies that may not even take place in the US, but actual involuntary layoffs and discharges for whatever reasons.
Companies across the US always fire people for a variety of reasons; when these discharges are deemed to be for economic reasons, they’re called layoffs. During the Good Times before the pandemic, actual layoffs and discharges averaged around 1.8 million per month, with a then-record low of 1.6 million in September 2016. In February 2023, layoffs and discharges were 5% below the pre-pandemic record low:
Voluntary quits ticked up and at 4.0 million were 13% above the pre-pandemic record. This is a sign that workers are still confidently arbitraging the tight labor market to improve their income, benefits, or working conditions by jumping to new jobs, and that employers have to respond in order to retain staff and to fill the job openings that the quitters had left behind. There is still a lot of churn in the labor market.
Job openings in major sectors.
Professional and business services, a big category with 22.4 million employees in Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services.
It includes some of the tech and social media companies. Others are in the “information” sector or in other categories. The job openings have tightened up from ridiculous levels, but remain very high.
- Job openings: -278,000 in February from January, to 1.82 million
- From 3 years ago: +41%
In “Information,” job openings ticked up for the second month in a row, after the worst plunge since the Dotcom Bust, and are back at the middle of the range before the pandemic. Some of the tech and social media companies are categorized in this sector.
At current level of 147,000, job openings are roughly half of where they’d been at the peak in April 2022. Many of the layoff announcements and hiring freezes have occurred in this sector.
The small sector with only 3 million employees includes companies engaged in web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.
Leisure and hospitality, a big sector with 16 million employees:
- Job openings: -87,000 in February, to 1.5 million, second month in a row of declines, off the record in December, and still in the astronomical zone.
- From three years ago: +61%!
Healthcare and social assistance, one of the largest sectors about 21 million employees: job openings fell for the fifth month in a row, from the record in September, but remain in the astronomical zone.
- Job openings: -150,000 from prior month, to 1.68 million.
- From three years ago: +42%
Retail trade, with about 16 million employees. This is one sector that has normalized.
- Job openings: -72,000 to 829,000 openings, back in the pre-pandemic Good Times range and well above the prior years.
- From three years ago: +10%.
Education/state & local government job openings, most of them in education.
- Job openings: unchanged at 857,000 openings.
- From three years ago: +24%
Manufacturing, with about 13 million employees:
- Job openings: -38,000 in February, to 694,000, still well above the pre-pandemic record,
- From three years ago: +72%!
Construction, with about 8 million employees, in all types of construction:
- Job openings: +129,000 in February, to 412,000, near record highs.
- From three years ago: +37%
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