The Job Openings and Labor Turnover Survey report released today (also known as JOLTS) showed that hiring held steady at American businesses in January, in spite of the year-end stock market tumbles and the government shutdown.
Job openings clocked in at 7.581 million—exceeding the number of unemployed Americans for the 11th straight month, and doing so handily, by more than 1 million. While job openings remained high, hiring chugged along at a merry pace, quits rose, and layoffs actually fell.
Here are three key takeaways from the report:
1. The job market is surprisingly resilient
Total household net worth in the U.S. fell by about $3.7 trillion in the fourth quarter of 2018 as the stock market plummeted. And the longest federal government shutdown in history took place from December 22 until January 25, with widespread consequences. Yet the job market held strong. How can that be?
Well, hiring is a long-term decision, influenced by economic fundamentals and businesses’ expectations regarding their future outlooks. That’s why it can be remarkably resilient against one-off events and screeching headlines. The hiring rate—the fraction of the total employed population hired each month—held steady in January at around its 2005-2006 average.
2. Workers are confident
Quits ticked upwards again in January, after softening somewhat since September. The quit rate has now been 2.3% or higher for 11 months—a clear sign that workers remain confident in their ability to find better jobs in this bustling job market. There are now about two quits for every layoff. Although there are many surveys that try to measure consumer confidence, workers’ revealed behaviors—particularly the extent to which they vote with their feet, take a leap of faith, and bet on future opportunity—may actually be the best measure we have.
The high quit rate is a major source of upward wage pressure. That’s because turnover costs can sometimes be as high as an employee’s annual salary, and they are a strong motivator for employers to raise wages to retain their top talent. Nominal wage growth is now 3.4%—the highest rate in almost a decade.
3. Employers are hungry for workers
Overall, there are more job openings than unemployed Americans, with the largest gaps found in health care and social assistance, followed by professional and business services. Employment in those sectors is growing rapidly, and employers are hungry for workers with the right skills and qualifications. Many are raising wages, investing in training, and improving working conditions to attract and retain talent and to appeal to a wider talent pool. They will continue to feel pressure to take such steps as long as job openings exceed the unemployment level and the quit rate remains elevated.
Could we see job openings reach 8 million, the quit rate reach 2.5%, and wage growth reach 3.5% in 2019? At ZipRecruiter, we are bullish on the job market, especially after seeing it withstand the turbulence on Wall Street and in Washington, DC.