State of the Labor Market

January 2020 JOLTS Report: A Solid Situation Before the Shock

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Prior to the coronavirus shock, the US labor market was quite strong. Demand for workers was slowing down, but still relatively robust. Workers were taking advantage of this demand and quitting jobs at a healthy pace. And businesses were laying off workers at record low rates. 

We can take some solace that, as of January, job openings outnumber unemployed workers for 23 straight months. We can also be glad that employers were hiring at a robust level. But that was then and this is now.

Many eyes will be on layoffs and the number of workers that employers shed in the coming weeks and months. At least historically, layoffs have been the last resort of employers as they traditionally slowed down hiring before laying off workers. Slower growth in new hires would precede slower growth in overall employment. I’ll keep an eye on this trend to see how these trends hold up across industries and for the overall economy.

I expect this report will look quite different in the coming months. Economic data always lags economic reality. We just have to realize that the numbers are going to lag reality significantly for some time to come.

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