Labor Shortages Shift To Higher Paying Industries, ‘Quits’ Fall For Second Month, But Still In Astronomical Zone
Is the once-high-flying stock slump bringing day-traders back into the job market?
By Wolf Richter for WOLF STREET.
Jobs in January remained at the upper end of the astronomical zone, the second highest on record, just a hair below the record set in December. Companies reported 11.26 million job openings (seasonally adjusted), up 57%, or 4.1 million, from January 2020. The Astronomical Zone began to expand in mid- 2021.
These job openings in JOLTS data from the Bureau of Labor Statistics are do not based on online job postings, but a monthly survey of 21,000 non-farm businesses and government entities, asking how many actual job postings they had at the end of the month.
“Quits”: 4.25 million workers voluntarily quit their jobs in January (seasonally adjusted), the second straight month of month-over-month declines, the likes of which we haven’t seen since April 2020. Quits remained in the astronomical zone – it’s just that there are fewer people leaving their jobs, because the efforts of companies to retain their employees by offering them higher wages and better working conditions could bear fruit.
Departures do not include involuntary separations. A high quit rate with a high hiring rate – the current conditions – are a sign that companies are aggressively poaching workers from each other. When I hire someone away from you by offering them greener grass, I report that new employee as a “hire” and you report the employee who left you as a “resigner”. On the net, between the two of us, employment has not changed. It was just churning.
Poaching and the massive attrition that accompanies it has been the main reason for the resignations, given the large number of hirings going on at the same time: while employers reported that 4.25 million of their employees had left their jobs, employers also reported hiring 6.46 million new people.
This astronomical rate of quits over the past 10 months shows that power in the labor market has shifted to workers, as many of them have already found or are convinced that they will find better opportunities elsewhere. And companies must adapt to this by offering better opportunities, more money and better working conditions in order to retain their employees.
People also quit their jobs to leave the workforce – to retire, to spend more time with their stocks and cryptos, to care for someone, etc. And there were plenty at the start of the pandemic, but the labor force has grown sharply in recent months and is now almost back to pre-pandemic levels, according to separate BLS labor market data. The active population is made up of people who have a job or who are actively looking for a job:
The shift of job offers to higher paying industries.
Job postings were very high across all employer categories, but in some categories they started to move out of the astronomical zone, while hitting new highs or staying at record highs in other job categories. employers. And we’re starting to see a trend.
Job postings plummeted in leisure and hospitality, arts and entertainment, retail, transportation, warehousing and utilities, and wholesale. The declines could be a sign that aggressive hiring and retention efforts are beginning to bear fruit, and that companies are able to fill some of their job openings.
For example, job vacancies in Leisure and Hospitality, where wage increases have been particularly strong to entice people to come to work, fell sharply in January (seasonally adjusted data) but remain in the astronomical zone:
Job postings in top-paying industries hit record highsor maintained records, including in professional and business services, health care and social assistance, and education and health services.
For example, professional and business services employers reported 2.065 million job openings, the highest on record, up 62% from two years ago:
Overall, labor shortages remain in the astronomical zone and are significant and disruptive for companies that cannot recruit the workforce they want, and they have increased wages to attract and retain talent . And workers discovered their bargaining power and a new flexibility among employers.
But we are now seeing more people re-entering the workforce, for whatever reason.
Some of them may have wasted all their stimulus and PPP and retirement money on stock and crypto bets gone bad – with many high-flying companies’ stocks down 70% and even by 90%, which when exploited wipes out capital. And maybe it’s time to come back and get a job – and there hasn’t been a better time to do so in many decades. A rout in asset prices could well bring more people back into the labor market – something that also happened during the dotcom meltdown. A lot of them are some of the smartest people out there and it would be great to get them back in the workforce to do something real.
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