The US labor market may have recovered 42% of jobs lost since the COVID pandemic shut down businesses (9.3 million jobs added from May-July 2020 out of 22.2 million lost from February-April), but how many “new” jobs are available versus, say, the depths of the 2009 Great Recession? The answer will show the health of the current recovery and the possibility of a faster snap back to normal relative to a “traditional” (if very deep) recession.
Employers don’t need to post a job opening if they have furloughed workers they wish to rehire, so open positions are a sign of new demand for more workers or (perhaps) better talent. Here’s where job openings as a percentage of the labor force stand as of June 2020 versus after the Financial Crisis (latest available data):
- Increased to 3.68% in June 2020 after falling to a 3.19% in April.
- Fell to a record low of 1.47% in July 2009.
- Rose to 2.03% in July 2010 (1 year later) and 2.40% in July 2011 (2 years later).
The upshot: job openings as a percentage of the labor force have actually climbed back to levels higher than the peak of the last economic cycle (3.68% as of June 2020 vs 3.26% in April 2006). This statistic is only provided in the Job Openings and Labor Turnover Survey (JOLTS) out today and reflects underlying strength in the US labor market despite a still uncertain economic environment.
Given that almost half (45%) of layoffs and discharges were in the retail and leisure and hospitality industries during March and April, how have they fared since relative to job openings? Two points:
- There have been an additional 541k job openings in leisure and hospitality since April, bringing the total to 855k as of June. That’s back to 90% of job openings that were available for this industry in February (950k).
- There have been an additional 153k job openings in retail trade since April, bringing the total to 674k as of June. That’s back to 94% of job openings that were available for this industry in February (715k).
- Both industries saw the biggest gains in job openings versus any others from April to June.
The upshot: we’ll have to watch future JOLTS reports to see how much of this progress sticks given flareups in the virus over the last few weeks and the shifting nature of reopenings, but this is notable improvement given that 1 in 5 Americans worked in retail or the leisure and hospitality industries pre-COVID.
As for the US labor market as a whole, here’s a deep dive into key data in the JOLTS report for June. Just note that while most commentators look at the levels of each data point in the report, we always adjust it for the size of the US labor force so we can compare current data to prior cycles.
#1: Hires as a percentage of the labor force:
- Rose to 4.19% in June 2020, besting the post-recession high of 3.69% in April 2019.
- Troughed at 2.35% in June 2009. (Note: US equities bottomed in March 2009, and even April 2020 was better than June 2009)
- Increased to 2.68% in June 2010 (1 year later) and 2.85% in June 2011 (2 years later).
Takeaway: while it took a long time for employers to start hiring in the last economic cycle, they are rehiring employees or hiring new workers quicker now given the unique setup of this recession.
#2: Quits as a percentage of the workforce:
- Increased to 1.62% in June versus the post-recession high of 2.21% in July 2019.
- Bottomed at 1.01% in August 2009.
- Increased to 1.20% in August 2010 (1 year later) and 1.33% in August 2011 (2 years later).
Takeaway: quits as a percentage of the workforce during the COVID Crisis never dropped as low as during the Great Recession. While we think workers will still worry about holding onto their existing jobs with an uncertain economic/virus outlook, they are regaining confidence in the economy.
That said, the biggest rise in quits from May to June came from retail trade, health care and social assistance, and accommodation and food services, so Americans may also be quitting service sector jobs that are more customer facing and exposed to COVID-19. This surge in quits could also help explain part of the jump in job openings as service sector employers need to find workers who will work in that type of environment and make up for those who don’t want to return.
#3: Layoffs and discharges as a percentage of the labor force:
- Dropped to 1.18% in June compared to the record high of 7.05% in March and all-time low of 1.00% in September 2016.
- Peaked at 1.72% in April 2009.
- Fell to 1.13% in April 2010 (1 year later) and 1.16% in April 2011 (2 years later).
Takeaway: the bulk of layoffs are in the past and now around normal levels given that the service industry has been able to hire workers back as economies reopen.
#4: Our “Take This Job and Shove It” indicator, or quits to total separations:
- Climbed to 54.6% in June after hitting a record low of 18.8% in April. The all-time high was 63.5% in March 2019.
- Bottomed at 36.5% in April 2009.
- Rose to 48.1% in April 2010 (1 year later) and 47.2% in April 2011 (2 years later).
Takeaway: our “Take this job and shove it” indicator improved amid a continued fall in layoffs/discharges and jump in quits.
Bottom line: the labor market is recovering faster than during the Great Recession, but there’s still a long road ahead before it gets back to pre-pandemic levels. Further Federal economic stimulus is still needed to make a fuller US labor market recovery more likely.