The number of job openings in August fell by 1.1 million from the previous month, the second largest decline in the history of the Job Openings and Labor Turnover report, which began collecting data in 2000.
Job vacancies fell 10% in August to 10.1 million, compared to 11.2 million in July. Even so, the odds are still historically high, and a rapid rise in layoffs and hiring means it’s still largely a labor market — it’s just cooling off a bit, as the Federal Reserve intended.
The biggest surprise is that the decline didn’t happen until June, when the Fed raised interest rates by 0.75 percentage points to curb inflation, says Julia Pollak, chief economist at ZipRecruiter. She says online job vacancies started falling as early as June, and she expected the Labor Department’s data to align with that timeline. Instead, July openings jumped to 11 million.
1 million jobs gone
The drop in job openings in August is the result of employers reducing their future hiring plans, Pollak says, or hiring only to replace employees rather than hiring new positions to expand their team.
“They only hire people when it’s absolutely necessary,” she says. Other industries could “get back to normal now that they are fully staffed”.
Among the jobs that saw the largest job declines in August were those in healthcare and social assistance, other services (such as appliance repair and personal care services) and retail.
Pollak expects this downtrend to continue in industries sensitive to rising inflation, falling stock prices and contractions in other parts of the economy – think finance, real estate and construction.
In other service sectors, however, slower hiring intentions could exacerbate staffing shortages and lead to longer wait times, slower service or limited availability in places like restaurants, shops and airports, Pollak says.
It could also spell trouble for a hectic Christmas shopping season.
This fall’s seasonal hiring push is “much slower and more cautious than in previous years,” Pollak says. Employers who don’t want to hire too much could instead underhire or leave staffing to the last minute when they may need to hire at a premium.
“It’s still a very tight market”
Yet there are 4 million more job openings than people can fill them, meaning “it’s still a very tight market” and as beneficial to workers as ever, Pollak says.
An increased 4.2 million people quit their jobs and 6.3 million were hired into new ones. The rate of new hires is outstripping the rate of layoffs in all major sectors, notes Elise Gould, senior economist at the Economic Policy Institute.
Despite fears of a recession in other parts of the economy, this is not reflected in the labor market. Around 50% more jobs are available to workers than before the pandemic. Around 1% of the workforce was laid off in August, almost a record low. And from September, more people entered the labor market or are looking for work, with the labor force participation rate rising to 62.4%, its highest level for the year.
1 in 4 workers would quit without finding a new job
Workers remain overwhelmingly confident in the job market, with more than 4 million people voluntarily resigning every month for more than a year.
According to ZipRecruiter, job seeker confidence in the market rebounded in September from an all-time low in August.
About 1 in 4 workers are so confident in the market that they would quit their current job without a new offer. Meanwhile, 34% of job seekers expect wage growth to continue accelerating rather than stalling, and nearly half, 48%, would be willing to move to another neighborhood or state for a new job starting in September.
And more Americans are working multiple jobs, which Pollak sees as another sign of a strong labor market. According to a September poll, nearly 70% of Americans are looking for extra work to fight inflation. But Pollak says the proportion of concurrent workers tends to increase when people have ample opportunities for paid work.
“This is a sign that there are still many jobs where employers even approach passive job seekers and current employees,” says Pollak. “They say, ‘Hey, I need you,’ and the workers are trying to extort every dollar they have.”
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