U.S. Job Turnover Holds Steady, That Is, Slow

After the monthly reported of national unemployment statistics, the Bureau of Labor Statistics (BLS) releases the more fulsome JOLTS report, on job openings and labor turnover (hence the acronym). The most recent report provides statistics that supplement the unemployment report for December, but unfortunately the numbers do not suggest any change from the bottom in turnover in spring 2009.

Yes, the data are a little stale, but they confirm the weak employment picture we've been seeing lately. (The reason I highlight what seems to be a redundant report is my hope that before long, the turnover data will show us something positive that is not apparent from the net-net nature of the unemployment stats.)

Job openings continue to bounce along the bottom at about 2.5 million, or 1.9 percent of jobs, seasonally adjusted. Areas of strength, both in terms of the number of openings and proportion to jobs, are still business services (via temporary services) and education and health care. Together, those two categories count for nearly a million openings, or 40 percent of the total, but only 27 percent of the payroll base.

Openings are most scarce in construction, at just 0.9 percent of jobs. (I would have thought the trades are booming, from the constant debris, banging and portable generator noise just below my window, coming from the Manhattan offices of Time Warner Cable.)

Hiring hovered at 3.1 percent of jobs, but fell to 4.0 million from 4.1 million in November. Retail and leisure and hospitality jobs lead the pack, but turnover in those fields is typically high.

(I retract my facetious advice to look for work as an actor, based on last month's turnover, as percentage openings fell way off in the arts, entertainment and recreation category fell sharply.)

Calculated Risk, the Cal Ripken of bloggers on the macroeconomy, provides us with a complete graph of turnover since such reporting began:

The best point to be gleaned from a longer-term view is that layoffs and discharges are down from their early 2009 peak, and stand at a level not far off the entire period. The spread between hirings and openings is about as wide as it was in 2002 recession.

Calculated Risk also points out:

Separations have declined sharply from earlier in 2009, but hiring has not picked up. Quits (light blue on graph) are at a new low too. Usually "quits" are employees who have already found a new job (as opposed to layoffs and other discharges).

The low turnover rate is another indicator of a very weak labor market.

Data for the Job Openings and Labor Turnover Survey (JOLTS) are collected and compiled from a sample of 16,000 business establishments. Each month, data are collected for total employment, job openings, hires, quits, layoffs and discharges, and other separations. The JOLTS program covers all private nonfarm establishments such as factories, offices, and stores, as well as Federal, State, and local government entities in the 50 States and the District of Columbia. The JOLTS sample design is a random sample drawn from a universe of more than eight million establishments.

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Data users should note that seasonal adjustment of the JOLTS series is conducted with fewer data observations than is customary. The historical data, therefore, may be subject to larger than normal revisions.

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JOLTS hires and separations estimates cannot be used to exactly explain net changes in payroll employment. Some reasons why it is problematic to compare changes in payroll employment with JOLTS hires and separations, especially on a monthly basis, are: (1) the reference period for payroll employment is the pay period including the 12th of the month, while the reference period for hires and separations is the calendar month; and (2) payroll employment can vary from month to month simply because part-time and oncall workers may not always work during the pay period including the 12th of the month.

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The shortfall appears to be about 2 percent or less over a 12-month period.