Layoffs hit record high as workers stay in control
The U.S. job market ended 2021 in a markedly different climate than the year began in: the number of jobs open and people leaving work appeared to stabilize in December – albeit at levels stratospheric – according to the New Jobs and Labor Turnover Survey, released Tuesday.
The number of people who left their jobs in December fell slightly from the previous month’s record of 4.5 million, to 4.3 million. Economists say the data reflects deep distortions that remain in the labor market nearly two years after the Covid-19 pandemic began spreading across the United States.
11 million jobs open indicates growing recognition among employers of the need to move forward – pandemic or no pandemic.
In December, there were 10.9 million job vacancies – a figure almost triple that of a year ago, and slightly higher than the 10.6 million job vacancies at the end of November.
The Bureau of Labor Statistics noted that job openings jumped 133,000 among accommodation and food service employers.
“In general, it was not a big surprise. We knew employers had many needs,” said Ron Hetrick, Senior Economist at Emsi Burning Glass. “We still find that most of our demand is occurring in this population of low-skilled workers,” he said.
The report also showed smaller increases in information services, manufacturing of non-durable goods, and education (state and local) which collectively totaled just over 100,000.
“Despite the omicron variant, demand for workers is still near record highs,” said Daniel Zhao, senior economist at Glassdoor. “It’s a sign that employers are hoping the omicron wave will be temporary.”
Rhea Moss, director of data insights and customer intelligence at recruiting software company iCIMS, said nearly 11 million open jobs indicate both growing recognition by employers of the need for moving forward – pandemic or no pandemic.
“What we’re seeing now is there’s a level of comfort,” she said. “You add this labor market situation with quit rates where they are [and] companies can’t necessarily afford to stop hiring,” she said. “This may be the start of better days in the hiring market.”
But first, labor market watchers are bracing for more short-term bad news. Even the most optimistic expect the monthly jobs report due out on Friday to reflect only modest growth in January, and some have even suggested the reading could turn negative.
“I think we’re headed for another disappointing number,” Hetrick said. “Omicron was kind of up in its survey week in December… We’re not off the hook.”
Many said the continued high number of people leaving jobs suggests that wage growth – an imperfect, though common, indicator of inflationary pressure – will remain robust. In December, wages rose year-over-year by an average of 4.7%.
“This is the seventh consecutive month of job openings exceeding 10 million,” said Greg Bassuk, CEO of AXS Investments. “The consistency of these high levels is going to be a factor in seeing more widespread levels of wage growth,” he predicted. “This is one of those reports that the Federal Reserve is watching closely.”
Employers are more willing to give workers a second chance rather than letting them go.
“Quitting in general is a strong indication that wages are on the rise, as many of these quitting workers are leaving for better opportunities,” Zhao said – but he dismissed the idea that runaway inflation was a foregone conclusion.
“Certainly the more we see sustained inflation, the more pressure there is on employers to raise wages to keep up with that inflation,” he said. “At this point, we don’t see strong evidence of a wage price spiral.”
Others have argued that higher productivity, combined with investments to maintain and generate new gains in worker production, could help soften the economic impact of higher wages and salaries.
“Not all wage costs have to go to price increases.” said Luke Tilley, chief economist at Wilmington Trust. “We have strong productivity growth right now, so that’s one thing that would soften the impact of that wage growth on prices,” he said.
Moreover, the flip side of employees increasingly willing to quit is an employer base that is doing everything it can to retain the workers it has – and companies are willing to spend money on workers. and workplaces to achieve this.
“We’re very focused on the massive amount of investment in technology investments,” Tilley said.
Layoffs fell to 1.2 million in December, the lowest since the BLS began tracking. “The record layoff rate suggests that employers are keeping the workers they have. Employers are extremely focused on retention,” Zhao said.
Overall, this could be positive for businesses as well as workers in the longer term, if the labor market emerges in a post-pandemic world with workers better suited to current labor demands, thanks investments in productivity-boosting equipment. and training.
“Employers are investing more in upskilling and skills training as they face labor shortages,” Zhao said. “We heard of employers doing more to provide on-the-job training or skills upgrading. Employers are more willing to give workers a second chance rather than letting them go.