More Job Openings Than Unemployed Workers, As People Quitting Hits All Time High

There was a surprising development last month, when the latest JOLTS report revealed a curious, if welcome for the US economy, inflection point: for the first time in reported BLS data, the number of US job openings surpassed the number of unemployed workers.

Fast forward one month, when as the BLS reported the number of unemployed workers surged from 6 million to 6.6 million as people who had previously remained outside the labor force, flooded back in. The question was whether this surge would also reverse this Opening-Unemployed trend. However, as the just released May JOLTS report revealed, for the second month in a row the number of job openings stayed above the total number of unemployed workers, as April's 6.698MM job openings number was revised higher to 6.840MM, to a new all time high, yet which dipped modestly to 6.620MM in May which however was still above the 6.564MM unemployed workers.

In other words, in an economy in which there was a perfect match between worker skills and employer needs, there would be zero unemployed people at this moment (of course, that is not the case.)

According to the BLS, the number of job openings decreased for total private (-228,000) and was little changed for government. Job openings increased in federal government (+12,000) and mining and logging (+10,000) but decreased in information (-60,000) and arts, entertainment, and recreation (-27,000).

Adding to the exuberant labor picture, while job openings remained above total unemployment, the number of total hires also increased to just shy of a new record, rising to 5.754 million in May from 5.581 million in April, and on the verge of an all time high. The number of hires increased the most in health care and social assistance (+48,000). 

According to the historical correlation between the number of hires and the 12 month cumulative job change (per the Establishment Surve), either the pace of hiring needs to drop, or else the number of new jobs will rise significantly in the coming months.

But the biggest surprise in today's report was the number of quits - the so-called "take this jobs and shove it" indicator - which shows worker confidence that they can leave their current job and find a better paying job elsewhere. Well, according to the BLS, as of May, this number just hit an all time high, rising from 3.349MM in April to 3.561MM in May, an increase of 212K in the month, the biggest monthly increase since December 2015.

Putting all this in in context

  • Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.6 million open jobs on the last business day of May 2018.
  • Hires have increased since a low in June 2009 and have surpassed prerecession levels. In May 2018, there were 5.8 million hires.
  • Quits have increased since a low in September 2009 and have surpassed prerecession levels. In May 2018, there were 3.6 million quits.
  • For most of the JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.
  • At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In May 2018, there were 0.9 million fewer hires than job openings.