AFSM - Companies Rebalance Their Workforce After The Excesses: Still The Most Astonishing Labor Market

2023-05-03 02:53:00 ET

Summary

• Overall, job openings fell again in March, but were still 31% higher than in March 2019, the last 'normal' March, based on JOLTS data.
• Rebalancing is taking place via layoffs and discharges, but they still remain very low.
• Voluntary quits have been on decline for months.

Before the ink even dried on the layoff announcements, tech and social media companies are already hiring again?

Companies started to rebalance their workforce, after the chaos and excesses of the pandemic. The information sector, where the layoff announcements are concentrated, worked off the entire pandemic pile of excesses, and companies started to hire again. Other sectors are still short on staff, such as teaching, or in the leisure and hospitality industry, where low wages, odd hours, and split shifts have induced workers to look for the greener grass elsewhere. In manufacturing, demand for workers is still historically high, but has come down from the astronomical zone. Retail normalized last year.

So overall, job openings fell again in March, but were still 31% higher than in March 2019, the last “normal” March, based on data from the Job Openings and Labor Turnover Survey (JOLTS), released by the Bureau of Labor Statistics yesterday. This is not based on job postings, but on surveys sent to 21,000 businesses, asking them about their actual workforce details.

Companies rebalance job openings , after the excesses of the past two years. Job openings in March at 9.59 million seasonally adjusted – and at 9.36 million not seasonally adjusted – were still above the Good Times trend before the pandemic (green line). But you can see the craziness that ensued in 2021, and how companies are now systematically working off the excesses. The chart shows the three-month moving average not seasonally adjusted:

Hiring has been in the same range since October. The three-month moving average in March dipped to 6.21 million newly hired workers, roughly where it had been in October 2022:

Rebalancing is taking place via layoffs and discharges, but they still remain very low. The three-month moving average of layoffs and discharges rose to 1.69 million in March, now reaching the low end of the range during the Good Times.

Companies always discharge people for a variety of reasons; when these discharges are deemed to be for economic reasons, they’re considered layoffs. During the Good Times before the pandemic, actual layoffs and discharges averaged around 1.8 million per month.

These are actual layoffs and discharges by employers in the US, not announcements of global layoffs that may not even take place in the US.

Churn in the workforce subsides. Has all this talk about layoffs had the effect that fewer people are quitting? Or is it that better jobs have gotten a little scarcer, and the grass isn’t much greener on the other side of the fence?

Voluntary quits have been on decline for months. The trend from the bottom during the employment crisis in 2009 through the Good Times in February 2020 had risen steadily, as job opportunities got better and more plentiful. Quits in 2019 exceeded historic highs. Then came the pandemic and all the gyrations in the labor market, and now the number of quits is still 10% above 2019, but has been below the Good Times trend line (green line). There is still a lot of churn in the labor market, but not nearly as much as there was:

Job openings in major sectors

Professional and business services, a big category with 22.4 million employees, include Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services. Some of the tech and social media companies are in this category (others are in “information” or in other categories).

The huge number of job openings has deflated some but remains very high. The three-month moving average, at 1.89 million, is still up by 38% from the same period in 2019:

“Information” is a small sector with 3 million employees at companies engaged in web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.

So this is kind of funny. But that’s how it works. Job openings started plunging in mid-2022 through December, the worst plunge since the Dotcom Bust. But then they rose, and in March they rose for the third month in a row, and sharply, to 187,000 openings. These three-monthly rises in a row caused the three-month moving average to jump.

In other words, even while mass-layoffs are still being implemented, companies are now looking for the right workers again – and there are still a lot of job openings in that sector, just not the crazy levels of early 2022.

Leisure and hospitality , with about 16 million employees. The three-month moving average dropped for the third month in a row, but remains very high at 1.51 million job openings, 44% higher than in the same period in 2019:

Healthcare and social assistance, with about 21 million employees: the three-month moving average of job openings has now fallen for 10 months in a row, from the astronomical zone, down to a still very high 1.71 million, 42% higher than in 2019:

Retail trade, with about 16 million employees, normalized in mid-2022 and has stayed in the same range, with the three-month moving average at 806,000 job openings, about flat with the same period in 2019:

Education/state & local government job openings, most of them in education, stabilized last year near record high levels and have not really come down from there, with the three month-moving average at 885,000 job openings, 52% higher than in the same period in 2019, as many school districts still have a very hard time hiring enough teachers.

Manufacturing, with about 13 million employees, has been trimming the huge number of job openings it had. But the three-month moving average of 711,000 openings is still 60% higher than it was in the same period in 2019:

Construction, with about 8 million employees in all types of construction, from powerplants to single-family housing, has trimmed job openings this year, from very high levels last year. In the West, particularly in California, the horrendous rains and flooding over the first three months this year slowed a lot of construction work — and hiring for that work. So we’ll be looking at the next few months for clarification.

In March, the three-month average dropped to 343,000 job openings, about 8% higher than in 2019:

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