The first week of the month sets the tone for job market news, as the Bureau of Labor Statistics releases its monthly JOLTS and Employment Situation Reports. Last week, they pointed in a clear direction: the labor market is on a stable, sustainable path—which is good news when taking the long view, but feels new and different compared to the past few years.
The Job Openings and Labor Turnover Survey for January showed job openings were steady at 8.9 million, while the number of hires declined month-over-month, now at 5.7 million from a revised 5.8 million, and quits remained the same at 3.4 million. The jobs report showed stronger-than-expected job gains in February (adding 275,000), while at the same time, the unemployment rate ticked up from 3.7% to 3.9%.
Here are five key takeaways:
The Great Resignation is running in reverse.
The hot job market of 2021 and 2022 was marked by high employee turnover as workers felt empowered to find new and better jobs. That’s not the case anymore—JOLTS showed that the quits rate has dropped to 2.1%, and is the lowest since August 2020.
“The labor market is shifting to an employer-controlled environment,” said Christopher Laney, Labor Economist and VP of Government Affairs at Lightcast. “As employee confidence in the labor market subsides, they’re choosing to stay put out of fear of layoffs or simply not being able to find a new opportunity in the near future. There are 500,000 more individuals unemployed looking for work today than a year ago.”
2. Normal doesn’t feel normal.
Historically speaking, this labor market is strong by almost every metric: layoffs are below pre-pandemic levels, the unemployment rate has been under 4% for over two years, and the US is still adding jobs at a steady clip. That’s good news, but it falters in comparison with the past few years.
“Compared to 2021 and 2022, the party has ended, and now people are feeling the hangover,” said Lightcast Senior Economist Ron Hetrick. “People think things are terrible now, but looking at the economy as a whole, we’re not seeing that in the data,Things are fantastic, but we lost track of what ‘fantastic’ was when we experienced something completely unrealistic in ‘21 and ‘22.”
“The hard economic data is normalizing to pre-pandemic levels; however, workers and consumers are experiencing anything but normal,” said Lightcast Senior Economist Elizabeth Crofoot. “Fundamental changes in the prices of goods and services, the availability of homes and mortgages, and the types of jobs available are keeping consumers tempered about their own economic situation. Quits are coming down as consumers remain plagued by higher prices and interest rates and feel increasingly tied to their jobs”
3. Small companies and service industries are driving growth.
Big-name companies in white-collar industries are laying off workers, but smaller companies and service-oriented jobs are buoying the overall labor market: Construction, Retail Trade and Leisure and Hospitality accounted for almost a third of private payroll job gains while industries Finance and Insurance as well as the IT-heavy Information sector were all flat.
“The greatest needs in our economy are in service-oriented jobs, not white-collar professional jobs—this report emphasizes what we’ve known for years,” Hetrick said. “These are jobs that our country absolutely needs to function, and the workers simply aren’t there.”
4. Confidence in a soft landing keeps increasing.
The January Employment Situation release reported a huge surge, indicating that the US added over 350,000 jobs. That came as a shock to many, especially because the Federal Reserve is watching the jobs number closely to help guide its decisions on cutting interest rates and curbing inflation without causing a recession. The latest release showed big downward revisions to the jobs reported in January and also December.
"January initially produced a strong gain, especially for what’s traditionally a layoff-heavy month, but as more survey responses came in, so did more reports of layoffs,” Hetrick also said. “The big numbers we saw in January were a huge surprise, so we should be glad to see them more in line with expectations. Wages on an annual basis ticked down from 4.4% in January to 4.3% in February, so that's a good sign for the Fed.”
5. On International Women’s Day, the jobs report showed women are powering the US labor market.
Senior Economist Elizabeth Crofoot shared four key insights from the report:
The next batch of economic data comes out on April 2 for JOLTS and April 5 for the jobs report, and they’re likely to show consistency with releases over the past few months: demand for workers is still historically high, requiring deliberate and incisive hiring strategies, but as lower quits indicate employees are more likely to stay, intentional workforce planning is increasingly important—for everyone across the labor market.
