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Workers are still reaping the benefits of a hot labor market characterized by few layoffs, ample job openings and a high level of voluntary departures, according to the US Department of Labor data issued Wednesday.
The numbers reveal that the pandemic-era trend known as the Great Resignation is still in full swing despite fears of a US recession, though it is showing some signs of leveling off, labor economists said.
“Overall, this doesn’t look like a job market about to tip into recession,” said Daniel Zhao, a senior economist at career site Glassdoor. “Labor demand is still extremely hot, and even if things are cooling from white-hot, they’re still red-hot.
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“I think the question on everyone’s mind, though, is if this will continue,” Zhao added.
Job openings and ‘quits’ near record highs
A “Help Wanted” sign in Patchogue, New York, on Aug. 24, 2021.
Steve Pfost/Newsday RM via Getty Images
There were nearly 11.3 million job openings on the last business day of May, the Labor Department reported Wednesday.
Job openings — a proxy for employers’ demand for labor — are down from about 11.7 million in April and a record 11.9 million in March. But they are still elevated in historical terms and hovering near their level of late 2021.
Additionally, workers have been quitting their jobs at a near record pace. About 4.3 million people voluntarily left their jobs in May, about the same as in the previous month and down only slightly from their peak of more than 4.4 million in March.
“The quits rate was doing 100 [miles per hour] on the freeway; It’s slowed down but it’s still doing 90,” said Nick Bunker, an economist at job site Indeed. “It’s still pretty quick, just not as fast as it was.”
This Great Resignation trend has been a centerpiece of the labor market since early 2021. It’s even entered the zeitgeist via so-called “QuitToks” on social media site TikTok and in a Beyonce song released last month.
For the most part, workers are shifting to better jobs, lured by factors like higher pay, according to economists. Wages in May jumped by 6.1% versus a year earlier, the biggest annual increase in more than 25 years, according to the Federal Reserve Bank of Atlanta.
Historically low layoff rates continue
Layoffs were also near record lows in May. The layoff rate — which measures layoffs during the month as a percent of total employment — was unchanged at 0.9% in May, the Labor Department said Wednesday.
Before the pandemic, 1.1% was the country’s lowest layoff rate. But May marked the 15th straight month in which layoffs were below that pre-pandemic record — an indication that employers are holding on to their existing workers, Bunker said.
Meanwhile, the unemployment rate of 3.6% is near the pre-pandemic level in early 2020, when it was 3.5%. That was the lowest jobless rate since 1969.
“It’s still a job seeker’s labor market,” Bunker said. “Workers still have lots of bargaining power.
“They maybe lost a little leverage from a couple months ago, but we haven’t seen a significant change there yet.”
Slowdown may be ahead
While the labor market has been a bright spot of the pandemic-era economic recovery, there are indications of things may cool — though it’s unclear how much and how quickly, economists said.
The Federal Reserve is raising borrowing costs for consumers and businesses in a bid to slow the economy and tame stubbornly high inflation. What’s more, the latest inflation reading came in hotter than expected, and the latest retail sales data was weaker than anticipated, Glassdoor’s Zhao said.
“We know quite explicitly the Federal Reserve is trying to cool down the economy,” Zhao said. “One of the places that’s going to happen is in the labor market.
“Things might slow down as the labor market cools, but for right now we’re still very much in the Great Resignation,” he added.