Why This Counts: Job Openings and Labor Turnover Survey

Looking solely at net employment change is similar to looking at the surface of a lake. You’ll see ripples and changes, but there’s a whole lot of activity going on underneath the surface. Using JOLTS data—the Job Openings and Labor Turnover Survey—provides a peek at what’s going on below the surface of net employment change.

The basics

JOLTS is a monthly survey of 16,000 establishments that asks employers to provide information on the number of job openings (as of the last business day of the month) and the total number of hires and separations that occurred throughout the month. By asking for the total number of hires and separations over the entire month, we can get a sense of just how many jobs started and ended within a month. For example, in February 2017 there were 5.3 million hires and 5.1 million separations. That’s approximately the population of Colorado moving in and out of jobs in a single month!

Editor’s note: A text-only version of the graphic is below.

Understanding the churn

You may be familiar with the headline payroll employment number that comes out each month, with information on how many net jobs were gained or lost. However, JOLTS data give us insight on what goes on beyond the monthly employment data. JOLTS data show us just how dynamic the U.S. labor market is and can illuminate which industries have persistent unmet demand for workers.

Movement into and out of jobs is often called “churn.” As the rates of hires and separations climb, this increased “churn” can signal a healthy labor market where workers can move in and out of jobs with relative ease. Similarly, when rates of hires and separations fall, workers may have more difficulty moving from job to job.

JOLTS data can also give us insight into labor market changes before the net employment figures can. In the last recession, the hiring rate started to decelerate before payroll employment slowed.

Further insight into industries

Labor market activity differs by industry. By using the combination of hires and job openings rates, we can explore which industries have persistent low-level demand for workers and which industries may have a high unmet demand for workers. When the openings rate exceeds the hiring rate, the industry has an unmet demand for workers.

Consider jobs in construction, retail trade, and accommodation and food services. There are fewer job openings than hires in these industries, suggesting that employers can easily find workers. Many jobs in these industries require minimal training or experience, which means it is easy to find workers. It may also mean that workers don’t stay with one employer for very long. JOLTS data confirm this. These industries have high churn, with large numbers of hires and large numbers of separations. Trends in hires and separations tend to move together, meaning employers are frequently replacing workers.

Editor’s note: A text-only version of the graphic is below.

In contrast, many jobs in health care and financial activities require more training and experience, suggesting it may be more difficult to find qualified workers. In these industries, job openings are greater than hires—employers are always looking for qualified workers. These industries also exhibit low churn, stemming from low numbers of hires and separations as a share of industry employment. This suggests workers remain with their employers for longer periods of time.

The professional and business services industry presents an unusual case, perhaps because of the diverse set of occupations within the industry. Included in this industry are many professional service workers, such as those in computer service and engineering firms. But the industry also includes temporary help supply firms and building services, such as janitorial and landscaping firms. Until recently, the industry as a whole had traditionally had more hires than job openings, suggesting an ease in attracting labor. This may be due in part to the number of lower-skilled jobs in this industry. But several times over the past year, job openings have exceeded hires, suggesting that employers need qualified workers. Perhaps this reflects the higher-skilled jobs in this industry. This recent trend bears watching.

Editor’s note: A text-only version of the graphic is below.

Jobs in government and education exhibit both low hiring and low job openings rates. These lower rates indicate that few workers are needed in these industries—workers may tend to stay in these jobs for long periods of time.

For more info on JOLTS, see www.bls.gov/jlt. For more in-depth information on the interaction between job openings and hires, see Charlotte Oslund’s article, “Which industries need workers? Exploring differences in labor market activity.”