Today’s release of the February Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics was positive across the board, with job openings increasing by 21,000, hires increasing by 146,000, layoffs decreasing by 11,000, and voluntary quits increasing by 88,000. After the relatively weak March employment situation report released last Friday, a stronger JOLTS report is welcome news, particularly noting that although this JOLTS report is for February, the job openings data straddle the February and March employment situation report. However, the improvement in job openings was not enough to bring down the ratio of unemployed workers to job openings, which was 3.7-to-1 in February, unchanged from January.
Though the February JOLTS report generally moved in the right direction, data on hires, quits, and layoffs shows that most of the levels are still very weak. One exception to that is layoffs: After increasing dramatically from the start of the Great Recession through the spring of 2009, layoffs began to drop quickly and have actually been at pre-recession levels since the fall of 2010. However, hiring remains very depressed, currently 15.5 percent below its 2007 average. And given that hiring is so low, it is unsurprising that the number of voluntary quits (figure below) is also currently very depressed, now 27.6 percent below its 2007 average.
What do low voluntary quits signify for young workers in particular? One key way workers see advancement and wage growth is through voluntarily leaving one job and taking another that offers better pay or other opportunities. All else equal, a larger number of voluntary quits represents a labor market where job opportunities are plentiful and employed workers have the flexibility to look for jobs that pay better and more closely match what they want to do and are good at doing. While this is true for workers of any age, it is particularly important for young workers, who are more likely to still be identifying their own abilities and interests than are older workers, and who tend to change jobs more frequently as they search for work that is a good match and that either pays more or has better potential for advancement. In other words, young workers in particular benefit from the opportunity to leave one job and move on to one that is a better fit. Therefore, while the low level of voluntary quits over the last four years represents lost opportunities for workers of all ages, it represents a critical loss of opportunities for young workers.
Much attention has been paid to the difficulties facing young people who graduated from high school or college during the Great Recession and its aftermath. As we enter graduation season our attention will once again turn to the labor market opportunities of the new crop of young graduates. But it is also important to consider, for example, the young person who was lucky enough to graduate from college and find a job in the spring of 2007, the last spring graduation before the Great Recession began. Under normal circumstances that young worker may have greatly benefited at some point in the last five years from leaving that job and moving on to one that was a better match and/or offered better pay, but instead that young worker may have been stuck in his or her job, unable to move on because of the lack of outside job opportunities. While data on voluntary quits are not available by age, the figure shows the overall number of voluntary quits has been low for four years, representing millions of lost opportunities.
With research assistance from Natalie Sabadish and Hilary Wething