Layoffs jumped while job openings pulled back as last year drew to a close. That’s the upshot from the latest Job Openings and Labor Turnover Survey (JOLTS), providing further evidence that the US labor market recovery is stalling.
We’ve reviewed JOLTS when it is out once a month for over half a decade because it is more detailed than the Employment Situation Report even though it is one month delayed. With Janet Yellen as President-elect Joe Biden’s pick to head the Treasury Department, it’s even more important to analyze this survey as we start 2021 given that JOLTS is one of her reportedly preferred measures of worker confidence and labor market health.
Here’s what you should know from the latest edition of JOLTS before we delve further into the details:
- Job openings as a percentage of the labor force dropped to 4.07 percent in November 2020 from 4.13 pct in October. That’s up from the pandemic bottom of 3.19 pct last April, but still down from 4.26 pct before shutdowns in February.
- Hires as a percentage of the labor force edged up to 3.72 pct in November 2020 from 3.68 pct in October. That’s actually higher than before lockdowns in February when it was 3.57 pct.
- Layoffs and discharges as a percentage of the labor force increased to 1.23 pct in November 2020 from 1.04 pct in October. That’s down from the record high of 7.06 pct in March, but also higher than 1.12 pct in February before the pandemic hit full stride.
- Quits as a percentage of the labor force rose slightly to 1.97 pct in November 2020 from 1.96 pct in October versus 2.09 pct last February.
- Our “Take this job and shove it” indicator – or quits to total separations – declined to 58.3 pct in November 2020 from 61.3 pct in October and versus 61.4 pct last February. That was a function of a greater pickup in layoffs/discharges than quits.
Takeaway: job openings and layoffs recovered much quicker than usual in the current crisis, but the pullback in the former and spike in the latter that occurred heading into the holidays are worrisome trends. So, what’s holding the US labor market back in these two categories?
- Job openings: While job openings in the leisure and hospitality industry were only down by 16k in November, they are off by 149k versus February (pre-shutdowns) and the most of any industry. Job openings in manufacturing and education/health services are up 139k in November versus last February (the only two major industries with more openings in November than February), but they still don’t fully make up for the loss in leisure and hospitality.
Other major industries with fewer job openings in November than February include: Financial activities (down 119k in November vs February), professional and business services (-83k), construction (-60k), information (-55k) and retail trade (-52k).
- Layoffs/discharges: There was an increase of 262k layoffs and discharges in the leisure and hospitality industry in November versus October, by far the most of any industry followed by education and health services (+44k) and professional and business services (+35k). There were also 121k more layoffs/discharges in leisure and hospitality versus February 2020 (pre lockdowns), the largest delta of any industry.
Takeaway: the leisure and hospitality industry is about 10 pct of the US workforce, so it will continue to act as a drag on the labor market until vaccinations are widely distributed and businesses can more reliably reopen. Another wrinkle: it’s not just employers laying off workers in leisure and hospitality, but workers in the industry also choosing to voluntarily leave their jobs.
Why would workers leave jobs in this environment? The Fed’s last Beige Book out in early December said firms are struggling to attract and retain workers as a “sharp rise” in virus cases spurred “renewed fears of infection”. It also listed “providing for childcare and virtual schooling needs” as a “significant and growing issue for the workforce, especially for women”. Given that women account for over half (52 pct) of all workers in the leisure and hospitality industry according to the BLS, the Beige Book’s anecdotal findings are clearly showing up in the data.
Bottom line: losses from the leisure and hospitality industry whether that be through layoffs or quits are offsetting gains from other industries. With an unemployment rate stuck at 6.7 pct, the US labor market may only tread water through at least Q1 unless vaccinations roll out meaningfully more quickly.