Quits Rate Hits Record In Funhouse Mirror Labor Market

US job openings fell more than 650,000 from July to August, closely-watched data out Tuesday showed.

The headline JOLTS print, at 10.44 million, was well below the 10.95 million consensus expected.

Hires dropped to 6.3 million, leaving the disparity near record levels (figure below).

The data comes as policymakers struggle to assess the trajectory of a labor market that’s hopelessly out of balance. September’s underwhelming jobs report underscored ongoing difficulties faced by employers in the services sector, where momentum has stalled, or at least according to the government’s report. ADP told a different story, which only added to the confusion.

What’s not debatable is the contention that the US labor market remains bedeviled by a mismatch between demand for workers and supply. That reality is feeding an increasingly contentious political debate about whether generous government assistance is an impediment to jobs growth. That, in turn, has implications for the future of Progressives’ efforts to expand the social safety net over the (shrill) protestations of Republicans and moderate Democrats.

Total separations were little changed at 6 million in August, the government said Tuesday. The quits rate rose to a record high at 2.9% (figure below).

The rate for layoffs loitered near a record low.

As the BLS helpfully reminded folks, “the quits rate can serve as a measure of workers’ willingness or ability to leave jobs.” Almost 4.3 million people quit a job in August.

Job openings in accommodation and food services fell (figure below) during a month when hiring decreased for the first time since the winter COVID wave.

It was the first drop since January, and likely highlighted the impact of the Delta wave on at-risk sectors. Hires in the sector dropped the most since December.

Meanwhile, the September vintage of the NFIB’s Small Business survey showed nearly a third of owners intend to raise wages over the next three months. Measures capturing the pervasiveness of problems with labor costs and labor quality hit records.

You can dig as deeply into the NFIB data as you see fit, but really, you’re going to come away with the same overall assessment no matter how nuanced yours might be compared to someone else’s.

NFIB Chief Economist Bill Dunkelberg summed it up. “Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” he said Tuesday. “The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations.”