July JOLTS report shows people were already quitting. But we gotta wait to see if it picked up in August

When last week’s August jobs report hit with a “disappointing” figure of 235,000, I said that I wanted to get a look at another report to get a better idea what might be going on. That report was the Job Openings and Labor Turnover (JOLTS) report, which goes a little deeper into the reasons behind the numbers in the jobs report.

Unfortunately, the JOLTS report lags by 2 months, so we are looking the strong months of June and July instead of the leveling off in August. But it still seems instructive to see where we were at before COVID re-gripped large parts of America, and as August started, a whole lot of employers said they were looking to fill jobs.

Pretty incredible chart: The US had a record 10.9 million job openings in July.

That is about 1.25 jobs for every unemployed person (there were 8.7 officially unemployed in July)

There were more job openings in every industry than pre-pandemic. pic.twitter.com/0WpKPpOa68

— Heather Long (@byHeatherLong) September 8, 2021

Part of the reason is that more people have been quitting their jobs than they were in March, as the economy opened up and COVID (temporarily) faded as an overhang. But the amount of people quitting have been more than made up for by the number of hires, which means the jump in job openings reflects employers wanting to add more staff to meet growing demand vs a rash of people leaving jobs.

As you go into the actual JOLTS report, you can see that there are growing needs in the health care field in a time when many emergency rooms and hospital beds are again being overwhelmed, 18 months after the pandemic first broke out.

On the last business day of July, the number and rate of job openings increased to series highs of 10.9 million (+749,000) and 6.9 percent, respectively. Job openings increased in several industries, with the largest increases in health care and social assistance (+294,000) ; finance and insurance (+116,000); and accommodation and food services (+115,000).

Both health care and accommodation/food services had already seen job openings on the rise since March, but reached new levels of need in July.

And while both sectors had seen an increase in the number of people quitting, it was nowhere near the amount of job openings. A big difference between the two is that accommodation/food services were at least hiring a decent amount of people in the Summer, while the level of hiring in health care didn’t change much at all.

Another sector that had big changes in July was retail trade (generally brick-and-mortar stores). There had been a lot of (seasonally adjusted) hires in that sector in June, meeting an increase in openings. But that reversed in July, and also included a notably higher level of quits, which makes me wonder if those individuals were moving out into different sectors.

Now let’s compare how these three sectors performed in the June, July and August jobs reports. And when you do that, you’ll see where that drop in Retail hiring hits in July, while Food Service/Accommodations stay strong, and that Health Care can’t add many jobs.

Change in jobs, US jobs report, June-Aug 2021
June
Retail Trade +175,300
Health Care/Soc.Assist +4,100
Food Service/Accommodations +522,600

July
Retail Trade +11,200
Health Care/Soc.Assist +9,400
Food Service/Accommodations +364,500

August
Retail Trade -64,400
Health Care/Soc.Assist +7,500
Food Service/Accommodations -50,300

The key question becomes “what caused those declines in Retail and Food Service/Accommodations in August”. My instinct is that it is a high number of quits and low number of hires to fill the many desired openings, because new unemployment claims have continued to fall in much of the last month.

So it sure seems that we have a lot of mismatches going on, where companies want to hire, but aren’t paying what workers want. At the same time, quits continued to slowly rise throughout the Summer, meaning employees felt they could get better opportunities or couldn’t afford to keep working because of other needs (be they health-related, caregiver-related, or other reasons).

Now if COVID puts a major crimp into demand (and the Fed is now indicating that this is starting to happen), that might limit the amount of hiring that companies want/need, which could get things a bit back toward normal. But with expanded unemployment benefits ending and some other stimulus supports fading, this also means we could see a lot of people facing tougher economic times, especially if COVID starts spiking layoffs.

These barriers and costs certainly seem to have already had an effect on the number of women working.

Mothers' employment fell in August, even though employment rose for other groups.

With the Delta surge, school and daycare reopenings have been shaky. It's a big burden on mothers and other caregivers.

(New CPS microdata for August.) pic.twitter.com/nD20Ksn78L

— Jed Kolko (@JedKolko) September 8, 2021

So while the July JOLTS report was illuminating, it’s the August report (which will drop in October) that will tell us a lot more. We will see if this exit of women from the work force shows up in increased quits as Summer ended, or if companies stopped wanting to hire as demand sagged.

Of course, if this plague isn’t burning itself out in a month, our economic concerns may be going well beyond job mismatches, and more into whether we should have people working at all in certain jobs and communities. And that will be a bad JOLT of a very different sort.