What to watch for in tomorrow’s Job Openings and Labor Turnover Survey data release: A sharp fall in job openings and hires
On Friday, the Job Openings and Labor Turnover Survey (JOLTS) data for March will be released. Even though we already have more recent data on the labor market from other sources, this survey will provide important new information about how the coronavirus recession is unfolding.
That’s because JOLTS provides information on the moving parts that go into the net change in the number of jobs—job openings, hires, layoffs, voluntary quits, and other separations (which includes worker deaths). With JOLTS, we can get a picture of what is driving the net changes reported in the monthly jobs report.
Further, the JOLTS data that will be released tomorrow cover the entire month of March (as opposed to the monthly employment situation numbers, which only cover through the middle of the reference month). Because the labor market began deteriorating dramatically around mid-March, Friday’s release will provide a good sense of the underlying dynamics of the coronavirus labor market. At the bottom of this post is a text box explaining how the JOLTS data fit into the labor market data landscape.
What do we expect to see? Job openings and hires both have surely dropped dramatically, while layoffs have skyrocketed (note, in the JOLTS data, people who were temporarily laid off or furloughed are counted as layoffs, as long as the furlough is expected to last more than seven days). In April 2009—the worst month of the Great Recession for layoffs—there were nearly 2.7 million layoffs, or 2% of the workforce. In that same month, around 2.5 million people applied for unemployment insurance (UI). In March 2020, more than 10 million people applied for UI, so total layoffs will almost surely be higher than 10 million, which would far exceed the highest value in the series.
Voluntary quits also surely dropped dramatically in March, since many people who otherwise might have left one job to take or search for another will likely opt to sit tight during this crisis, if they can. However, people who had to leave a job to, for example, take care of a child whose school closed as a result of the virus will be counted as a voluntary quit, so that will offset the decline in the number of quits. In other words, quits are unlikely to be “voluntary” quits to search and find a better job in today’s economy, and may be more likely to be quits to care for children (a qualifying event to receive Pandemic Unemployment Assistance).
The JOLTS survey has another category called “other separations,” which includes retirements and worker deaths. This category, though small, also probably declined, because even though worker deaths have risen, retirements—which make up the lion’s share of the category—likely declined as workers who might otherwise have retired and who have the option to hold onto a job may decide to do so given uncertainty around any retirement savings that are invested in the stock market.
The JOLTS report also allows us to examine each of these categories—job openings, hires, layoffs, and quits—by sector. On job openings, while we expect huge drops in general across the economy, there will likely be much smaller declines in job openings in warehousing and transportation as online shopping and delivery picked up. On layoffs, as the early round of job losses were in leisure and hospitality in March, we’d expect layoffs to also be more concentrated in that sector. Quits to take care of children may be less likely to occur in sectors where workers can more easily work from home, such as workers in financial activities, professional and businesses services, and information, and conversely more likely to occur in sectors such as leisure and hospitality, agriculture, transportation and utilities, wholesale and retail trade, and construction.
One thing we will not be focusing on in Friday’s release is the ratio of unemployed workers to job openings, which typically provides the number of job seekers for every job opening. At this time, however, that ratio will be difficult to interpret, given that a large share of unemployed workers report being on temporary layoff, which means they expect to be called back to their prior job. The ratio of unemployed workers to job openings will become a more useful measure of what job seekers are up against once the economy is able to more fully reopen, and those unemployed workers who now report they expect to be called back to their job are either actually called back, or begin looking for a new job.
The weekly unemployment insurance (UI) claims data come out every Thursday morning. They tell us how many people applied for UI in the prior week. The UI claims data provide crucial, but limited, information because there are a lot of moving parts in the labor market aside from people who lost jobs and applied for UI. The latest data from this morning indicate that 33.4 million workers have applied for unemployment insurance in the last eight weeks. This is more than five times higher than the worst eight-week period in the Great Recession.
The monthly employment situation comes out on the first Friday of every month (usually) and covers the labor market through the middle of the prior month. Among other things, it gives the total number of jobs added or lost in the economy. But one detail that is often brushed over about the monthly jobs number is that it is actually the net number of jobs added or lost. The net change in jobs is affected by gross changes in many things—the number of hires, the number of layoffs where people applied for UI, the number of job losses where people didn’t apply for UI, voluntary quits, and worker deaths. All of those components are moving right now. The latest data show that there were, on net, 20.5 million fewer jobs in April than in March—the largest one-month drop in recorded history.
That bring us to JOLTS. JOLTS is typically released mid-month, and it provides information about the entire month two months earlier. JOLTS provides information on the moving parts that go into the net change in the number of jobs—job openings, hires, layoffs, voluntary quits, and other separations (which includes worker deaths). Once the data are released on Thursday morning, we will be updating all our charts on our JOLTS landing page, found here.