The U.S. economy remains in an enormous jobs deficit: The labor market was down 15.9 million jobs at the end of April (JOLTS data), and down 19.6 million at the middle of May (jobs data)
Quick reminders about the Job Openings and Labor Turnover Survey (JOLTS):
- JOLTS data provide information on all pieces that go into the net change in the number of jobs. These components include: hires, layoffs, voluntary quits, and other job separations (which includes retirements and worker deaths). Putting those components together reveals the overall (or net) change.
- JOLTS data provide information about the end of one month to the end of the next, whereas the monthly employment numbers provide information from the middle of one month to the middle of the next.
This morning, the Bureau of Labor Statistics (BLS) released Job Openings and Labor Turnover Survey (JOLTS) data for April, showing the second-highest number of job separations on record (March was the highest) and the lowest level of hires on record. One important thing to understand about JOLTS data is the timing. JOLTS data provide information from the end of one month to the end of the next, whereas the monthly employment numbers provide information from the middle of one month to the middle of the next. The JOLTS data showed that 6.4 million jobs were lost from the end of March to the end of April. The monthly employment numbers straddle these numbers, showing that 20.7 million jobs were lost from mid-March to mid-April, and 2.5 million jobs were gained from mid-April to mid-May. Together, the JOLTS data and the monthly employment numbers paint a picture of the peak of job loss in this recession being in late March or early April, and people beginning to go back to work by the beginning of May. But no matter how you measure it, the U.S. economy remains in an enormous jobs deficit—we were down a total of 15.9 million jobs at the end of April (according to the JOLTS data), and down a total of 19.6 million at the middle of May (according to the monthly employment data).
The human suffering and lost productive potential represented by these numbers is immeasurable. Congress must act by extending the expanded unemployment insurance benefits until the labor market sufficiently recovers and provide additional aid to state and local governments, which continued to face job losses in May and most certainly will face even more drastic budget cuts without more assistance.
In the pre-coronavirus period, there were typically around 1.8 million layoffs every month as a result of natural churn in the labor market. In April, there were 7.7 million layoffs. This is nearly three times the worst month of the Great Recession. Before the coronavirus, there were also typically around 5.9 million hires every month, as businesses started up or expanded. In April, that dropped to 3.5 million, a 40% drop from the pre-virus period, as business formation and growth cratered.
Pre-coronavirus, there were typically around 3.5 million voluntary quits each month. A large number of quits signifies a healthy labor market where people can leave their job to find one that is better for them. In April, quits dropped to 1.8 million—a 50% drop from the pre-virus period. And it’s likely quits would have dropped even further if not for the fact that people who had to, for example, leave a job to take care of a child whose school closed as a result of the virus are still counted as voluntary quits.
Pre-virus, there were about 340,000 “other job separations” every month—mostly retirements, but also worker deaths. COVID-19 has increased worker deaths but likely reduced retirements, due to retirement insecurity. The category overall has seen little change, at 386,000 in April.
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