US Job Market Chill: Workers Less Eager to Jump Ship Amidst Uncertainty

U.S. Job Market Shifts Amidst Uncertainty
Voluntary Resignation Rates Decline

The trend known as the Great Resignation, characterized by employees leaving their jobs for better opportunities amid post-COVID-19 labor shortages, seems to be subsiding. American workers are becoming more cautious about resigning as their confidence in securing better employment diminishes. Data from the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor on the 5th indicates a shift. While the voluntary resignation rate peaked at 3.0% in April last year, it has stabilized at 2.3% for three months straight as of October. This trend suggests a decrease in job-quitting, linked to lowered confidence in finding alternative employment. Last year saw over 4 million workers quitting monthly, which has now decreased to 3.6 million.

The number of job openings has also decreased. In October, the number of job openings was 8.73 million, down 617,000 from the previous month (9.35 million). This is the lowest figure in two years and seven months since March 2021. The market outlook aggregated by the Wall Street Journal (WSJ) also fell short (9.4 million).

Changing Dynamics in the U.S. Job Market

This is the direction the Federal Reserve (Fed) wants. Generally, economists interpret many job openings coupled with a low unemployment rate as indicators of a booming economy. However, the situation in the U.S. has been different since the pandemic. As the COVID-19 pandemic broke out in March 2020, American baby boomers (born between 1946 and 1964) retired early, and many workers left the labor market. As a result, the unemployment rate dropped to a record low of 3.5%, but there was still a labor shortage in the job market. Since everyone who could work was already working, employers had to raise wages to hire those working in other jobs.

Recently, the atmosphere has changed. According to the WSJ, the average number of hires per month in the U.S. from January to October this year was 239,000, down from 600,000 in 2021 and 400,000 last year. The year-on-year hourly wage growth rate also exceeded 6% until the first half of this year since March last year, but it dropped to 5.2% in October. As the number of job openings decreases, the number of jobs available per job seeker (unemployed) decreases from 2.01 in March last year to 1.34 in October. This is still higher than the 2019 average of 1.2 but has passed the overheating stage. Paul Stout, an economist at Bloomberg Economics, said, “1.2 jobs per job seeker is a lower figure than expected if there had been no pandemic.”

Anticipation for November Employment Report

The market eagerly awaits the November employment report, which will be released on the 8th. The Wall Street Journal projects an increase in November’s aggregate non-farm employment, expecting it to rise from the previous month’s 150,000 to 190,000. Thomas Graf, Chief Investment Officer (CIO) of Pascit, recently commented on the changing dynamics of the market. He noted that the market’s attention is transitioning from concerns about inflation to signs of a slowdown in economic indicators. Graf highlighted that if the upcoming November employment report indicates a more pronounced downturn compared to the previous month, it could exacerbate worries about the economy’s health. He also suggested that this could shift the general consensus from expectations of a soft landing for the economy to fears of a hard landing.

By. Kim Heung Rok