Job openings and quits reach record highs in 2021, layoffs and discharges fall to record lows

The Job Openings and Labor Turnover Survey (JOLTS) estimates showed large increases in job openings and quits throughout 2021, despite the surge of two coronavirus disease 2019 (COVID-19) variants, Delta in the summer and Omicron at the end of the year. Layoffs and discharges declined throughout the year and reached a series low at the end of 2021. This article reviews the JOLTS estimates for 2021 at the total nonfarm, industry, and regional levels.¹ (For definitions of JOLTS terms, see the box that follows.)

Job openings

The job openings level is an indicator for the demand for labor between employers and potential employees. An increase in job openings signals that employers are in need of additional employees. This signal is further confirmed by the relationship between job openings and employment, as the two measures tend to increase and decrease together. The job openings level can also be a sign of shifts in the economy and often increases when approaching an economic expansion or decreases when approaching an economic contraction.²  

Over-the-month estimates show that job openings continued to increase throughout 2021 after the large decline in the spring of 2020 as a result of the February–April 2020 economic recession.³ From December 2020 to December 2021, job openings increased by 67.0 percent to a not seasonally adjusted level of 10.4 million.⁴ (See table 1.)

Job openings by industry

During 2021, the monthly job openings level for 16 of 19 industries reached an all-time series high. The three industries with the most job openings were professional and business services, at 2.0 million in October; healthcare and social assistance, at 2.0 million in December; and accommodation and food services, at 1.8 million in December. (See table 2.)

Job openings increased over the year from December 2020 to December 2021 in all 19 JOLTS industrial supersectors and total nonfarm. The largest over-the-year increases in job openings occurred in arts, entertainment, and recreation (+188.0 percent); educational services (+162.7 percent); and accommodation and food services (+145.3 percent).

Job openings by region

All four census regions reached series highs for job openings in December 2021. The Northeast series high was 2.0 million, the South was 4.3 million, the Midwest was 2.5 million, and the West was 2.7 million. (See table 2.) Comparing December 2020 and December 2021, job openings increased less in the South (+56.5 percent) than in the Midwest (+69.8 percent), the West (+75.5 percent), and the Northeast (+76.9 percent). (See table 1.)

Job openings and unemployment

One way to evaluate the number of job openings is to compare it with the number of unemployed people, published by the Current Population Survey. These measures tend to move in opposite directions. This relationship can be explored by dividing the number of unemployed by the number of job openings. This creates a measure referred to as the number of unemployed people per job openings ratio. If the resulting ratio is high, it indicates a high level of unemployed and a low level of job openings. The relationship between unemployed people and job openings is a useful comparison and can often signal times of economic expansion or contraction.

At the beginning of 2021, the unemployed people per job openings ratio was 1.4, continuing a decline that started after the recent high of 4.9 in April 2020. The ratio continued to steadily decline, falling to 1.0 in April 2021. The ratio remained unchanged until July before resuming the downward trend. Unemployed people per job opening fell to the lowest ratio in the history of the JOLTS series at 0.6 in November and December. The decline in the ratio reflects both the increase in job openings throughout the year and a decrease in the number of unemployed. (See chart 1.)

Hires

The total number of annual hires increased to a level of 75.6 million in 2021 (+4.0 percent), compared with 2019, during which the annual hires level increased to 72.6 million (+3.9 percent). The increase in 2021 marked the 12th consecutive year in which the annual hires level increased. (See table 3.)

Hires by industry

Annual hires increased in 13 of 19 industry supersectors and in total nonfarm in 2021 and decreased in 6 industries. The largest percentage increases in the annual hires levels were in information (+33.3 percent); state and local government education (+26.0 percent); and arts, entertainment, and recreation (+19.5 percent). The largest percentage decreases in hires occurred in federal government (−41.1 percent),⁵ construction (−12.6 percent), and real estate and rental and leasing (−9.8 percent). (See table 3.) Seven industries experienced annual series highs for the level of hires in 2021. Hires in professional and business services peaked at 14.8 million, accommodation and food services peaked at 12.3 million, and retail trade peaked at 10.4 million. (See table 4.)

As the nation’s economy continued to recover from the 2020 recession, four industries experienced seasonally adjusted monthly series highs in hires in 2021. The four industries were professional and business services (1.3 million in July), finance and insurance (224,000 in September), state and local government education (211,000 in June), and educational services (125,000 in January). (See table 2.)

Hires by region

In percentage terms, annual hires increased in 2021 by 9.3 percent in the South and by 4.2 percent in the Midwest, while hires in the Northeast and West declined by 2.5 and 0.5 percent, respectively. This differs from the pattern of regional hires in 2020, when the West had the greatest percentage increase in annual hires of 7.8 percent. This was followed by the Northeast (+7.4 percent) and the Midwest (+6.3 percent). The South (-0.9 percent) declined in 2020. (See table 3.). None of the regions experienced monthly series highs for hires.

Hires and job openings

In January 2021, job openings reached a level of 7.2 million, following increases after the February–April 2020 recession. Job openings continued to increase throughout 2021, reaching a series high in December 2021 of 11.4 million. While hires trended in a similar direction as job openings, the increases were less dramatic. Given the larger increases in job openings compared with hires, the difference between the two data elements reached its largest amount ever in the JOLTS series history, at 5.0 million in December. (See chart 2.)

Total separations

After annual total separations rose to an all-time JOLTS series high in 2020 because of the COVID-19 pandemic, figures in 2021 more closely resembled previous years. Total separations remained consistent as 2021 progressed, with the lowest level recorded in January (5.2 million) and the highest level recorded in November (6.2 million). Compared with 2020, annual total separations in 2021 fell from 80.8 million to 69.0 million, a decrease of 14.5 percent. However, the annual level for 2021 is still 1.4 percent higher than the level of 68.1 million in 2019. (See table 5.)

Total separations include quits, layoffs and discharges, and other separations. Each of these data elements has its own unique trend and cyclical movements. Quits are procyclical, which means that the number of quits typically rises when the economy expands and declines when the economy contracts.

In 2021, quits reached new series highs for both monthly and annual levels. The first new series high was recorded in March 2021 with 3.7 million quits, and that level continued to trend upward, reaching a peak of 4.5 million in November. The annual total of 47.8 million surpassed the annual level for 2020 of 35.9 million by 33 percent and is a new series high. The previous series high of 42.2 million quits was set in 2019.

Layoffs and discharges are countercyclical, which means that the estimates typically rise during economic contractions and fall during economic expansions. Layoffs and discharges levels reached historic lows in 2021. After recording the first new series low of 1.5 million in March, the level continued to trend downward, and reached its bottom in December with 1.3 million. The annual total of 17.0 million is a new series low and contrasts greatly with the series high of 40.8 million recorded in 2020. The previous series low was in 2013 at 21.0 million, and layoffs and discharges levels rose every year from 2016 through 2020.

In 2021, monthly other separations—which include retirements and transfers—increased as the year progressed. The lowest monthly level was recorded in January, at 278,000, matching the series low set in May 2009. The largest monthly level came in June, at 397,000. The annual total of 4.2 million marks the third consecutive year that annual other separations have increased and is the highest annual level since the 4.4 million recorded in 2016.

Chart 3 shows the relationship of the three components of total separations by displaying the percentage of total separations attributed to each type of separation. Quits as a percentage of total separations increased to 69.3 percent in 2021, the highest share ever recorded. Layoffs and discharges as a percentage of total separations decreased to 24.6 percent in 2021, the lowest share ever recorded. Other separations as a percentage of total separations increased to 6.1 percent in 2021 after a series low of 5.1 percent in 2020.

The number of annual quits rose considerably, from 35.9 million in 2020 to 47.8 million in 2021, for an increase of 33 percent. (See table 6.) The annual quits level has increased in 11 of the past 12 years, with 2020 being the only exception in that span. Annual layoffs and discharges fell notably, from 40.8 million in 2020 to 17.0 million in 2021, for a decrease of 58.3 percent. (See table 7.) The annual level of other separations rose, from 4.1 million in 2020 to 4.2 million in 2021, for an increase of 2.3 percent. (See table 8.)

Components of separations by industry

Separations are the total number of employees separated from their employer at any time during the reference month. Separations consist of quits, layoffs and discharges, and other separations. This section discusses what happened in 2021 with the components of separations by industry.

Quits

Quits include employees who left their job voluntarily, excluding retirements or transfers to other locations. In 2021, the number of annual quits grew in 18 of 19 industries, while the remaining industry had fewer quits. The largest percentage increases in annual quits levels were in arts, entertainment, and recreation (+56.7 percent), followed by other services (+48.4 percent) and durable goods manufacturing (+48.0 percent). The only decrease in annual quits levels was in state and local government education (−15.3 percent), which had set a series high in 2020. (See table 6.)

Nine of 19 industries reached a series high for the annual level of quits. Among these industries, highs occurred in professional and business services and in accommodation and food services (8.6 million each), and in retail trade (7.8 million). (See table 4.). In addition, 8 of 19 industries reached monthly seasonally adjusted series highs for quits in 2021. (See table 2.).

Layoffs and discharges

Layoffs and discharges includes involuntary separations initiated by the employer, including layoffs with no intent to rehire. In 2021, annual layoffs and discharges decreased in all 19 industries from the COVID-19-induced spikes in 2020. The largest percentage decreases in annual layoffs and discharges were in accommodation and food services (−81.8 percent), educational services (−73.4 percent), and federal government (−72.2 percent). The industries with the lowest percentage decreases in annual layoffs and discharges were in finance and insurance (−33.6 percent), professional and business services (−35.5 percent), and state and local government, excluding education (−39.0 percent). (See table 7.)

During 2021, seven industries reached a series low for monthly layoffs and discharges. These industries include real estate and rental and leasing, at 6,000 in June; wholesale trade, at 20,000 in December; and state and local government education, at 21,000 in January. (See table 9.)

Other separations

In 2021, annual other separations increased in 12 of 19 industries, with 7 industries having fewer annual other separations than in the previous year. The largest percentage increases in annual other separations were in information (+66.7 percent); arts, entertainment, and recreation (+46.4 percent); and finance and insurance (+44.2 percent). The industries with the largest percentage declines in annual other separations were in state and local government education (−42.6 percent); transportation, warehousing, and utilities (−20.7 percent); and real estate and rental and leasing (−19.1 percent). (See table 8.) One of the 19 industries reached a series high for the annual level of other separations: finance and insurance at 346,000. (See table 4.) There were two monthly seasonally adjusted series highs in other separations: professional and business services at 118,000 in June, and finance and insurance at 65,000 in September. (See table 2.)

Components of separations by region

This section describes the differences between the components of separations among the four census regions in 2021.

Northeast region

In 2021, the Northeast had an annual level of 10.0 million total separations, a decrease of 25.6 percent compared to 2020, and the largest decrease of all the regions. The Northeast quits level increased to a new series high of 6.4 million (+33.1 percent) but remained the lowest level regionally. For layoffs and discharges, the Northeast notably fell to 3.0 million, the largest percentage (−63.3 percent) decrease of the four regions. The Northeast other separations level rose to 698,000, the largest percentage (+8.2 percent) increase regionally.

South region

In the South, the annual level of total separations fell to 28.4 million, the smallest percentage (−5.9 percent) decrease regionally. Within total separations, the quits level rose to a new series high of 20.2 million for the South, an increase of 32.7 percent. The South layoffs and discharges level fell to 6.6 million, the lowest percentage decrease (−50.9 percent) of the regions, and the other separations level rose to 1.6 million, an increase of 7.3 percent compared to 2020.

Midwest region

In the Midwest, the annual total separations level fell to 15.1 million (−15.8 percent). Within total separations, there were 10.5 million (+31.7 percent) quits in the Midwest, a new series high. There were 3.7 million (−59.4 percent) layoffs and discharges, and other separations rose to 888,000 (+3.1 percent).

West region

In 2021, the West annual total separations level decreased to 15.5 million (−19.2 percent). Within total separations in the West, the quits level rose to 10.7 million, the largest percentage (+36.3 percent) increase among the regions and a new series high. The layoffs and discharges level fell to 3.8 million (−63.0 percent) and the other separations level fell to 981,000. (See tables 5, 6, 7, and 8.)

Separations for the regions

All regions reached series highs for annual quits in 2021. (See table 4.) In addition, all regions saw monthly series highs for quits in November 2021. The Northeast quits level reached a monthly series high of 608,000, the South quits level reached a monthly series high of 1.9 million, and the Midwest and West both reached a monthly series high of 1.0 million. None of the four regions reached monthly series highs for total separations, layoffs and discharges, or other separations. (See tables 2 and 4.)

All regions saw new series lows for annual layoffs and discharges. In addition, all regions reached monthly series lows for layoffs and discharges in 2021. The Northeast layoffs and discharges level reached a series low of 156,000 in December, the South reached a series low of 502,000 in April, the Midwest reached a series low of 244,000 in November, and the West reached a series low of 273,000 in both June and September. None of the four regions reached a series low in total separations, quits, or other separations. (See table 9.)

An analysis of each region by quits, layoffs and discharges, and other separations as percentages of total separations illustrates the different characteristics of the JOLTS estimates at the regional level. The Northeast had the smallest percentage of quits within total separations, at 63.6 percent in 2021. The South experienced the highest percentage of quits, at 71.0 percent. In 2021, the Northeast had the largest percentage of layoffs and discharges, at 29.4 percent. The South had the lowest percentage of layoffs and discharges, at 23.3 percent. The Northeast had the highest percentage of other separations, at 7.0 percent, while the South had the lowest percentage, at 5.8 percent. (See chart 4.)

Quits compared with layoffs and discharges

As 2021 progressed, the difference between quits and layoffs and discharges continued to grow. In March, quits exceeded layoffs and discharges by 2.2 million. As 2021 continued and quits kept increasing while layoffs and discharges kept decreasing, the gap grew even larger. In November, when quits reached its monthly peak at 4.5 million, the difference between quits and layoffs and discharges also peaked at 3.2 million. The previous series high was 1.8 million in March 2019. (See chart 5.)

Summary

JOLTS estimates reflected a vastly different labor market in 2021 compared with the 2020 labor market. In 2020, layoffs and discharges spiked at the onset of the COVID-19 pandemic while job openings, hires, and quits fell sharply. Layoffs declined markedly in May 2020 and hires saw a large increase, while the other measures recovered more gradually. Improvement continued in 2021. Job openings increased throughout the year as the demand for labor increased, culminating in a new monthly seasonally adjusted series high of 11.4 million in December. Annual hires increased for the 12th consecutive year, to a new series high of 75.6 million. Quits increased throughout the year, resulting in a monthly series high in November. By contrast, layoffs and discharges fell to a monthly series low in December, as employers sought workers.