A recent Economic Policy Institute (EPI) report examines job openings and labor turnover at the national level. It offers some background for understanding the same issues in the context of the Ashtabula County labor market. Job Openings and Labor Turnover Survey (JOLTS) report reflects the solid employment situation for April, which is considerably better than the weakness in March. Job openings were up, which, along with a slight drop in the unemployment level, meant that the job-seekers-to-job-openings ratio fell to 1.6 in April. While this reflects an improvement, it fails to include the 3.1 million missing workers in April and is still far above its low-point of 1.1 in 2000. Furthermore, it remains the case that even if we continue moving forward at the pace of average employment over the last six months (236,000 jobs per month), the economy won’t resemble the strength of the pre-recession economy (such as it was) until the end of next year.
The total number of job openings rose to 5.4 million in April while the number of hires was little changed at 5.0 million. While there has been a clear improvement, it is important to remember that a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” a company can put behind a job opening. If a firm is trying hard to fill an opening, it may increase the compensation package and/or scale back the required qualifications. On the other hand, if it is not trying very hard, it might hike up the required qualifications and/or offer a meager compensation package. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical—it tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled and the labor market is weak, as it is today, companies may very well be holding out for an overly-qualified candidate at a cheap price.
Another indicator of the labor market’s continued weakness is the depressed quits rate. The figure below displays the rate of separations disaggregated into the hires rate, the quits rate, and the layoff rate. Layoffs shot up during the recession but recovered quickly and have been at pre-recession levels for more than three years. The fact that this trend continued in April is a good sign. That said, not only do layoffs need to come down before we see a full recovery in the labor market, but hiring also needs to pick up—the hires rate was down slightly to 3.5 percent in April. It has been generally improving, but it still remains below its pre-recession level.
Hires, quits, and layoff rates, December 2000–April 2015
Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey
The voluntary quits rate fell slightly from 2.0 percent in March to 1.9 in April, the same rate it was in four of the last six months. In April, the quits rate was still 9.2 percent lower than it was in 2007, before the recession began. A larger number of people voluntarily quitting their jobs indicates a strong labor market—one in which workers are able to leave jobs that are not right for them and find new ones. Before long, we should look for a return to pre-recession levels of voluntary quits, which would mean that fewer workers are locked into jobs they would leave if they could. But we are not there yet.