Today’s Job Openings and Labor Turnover Survey (JOLTS) report should make us feel a bit better about the loss of momentum in the labor market. The new data show that the decline in employment in December was more a product of reduced hiring than a pickup in layoffs. In other words, total employment slowed because employers were hesitant about adding new workers. This trend is easier to reverse than the destruction of employer-employee relationships that happens when workers are laid off.
This trend can be seen most clearly in the leisure and hospitality industries, where most of December’s job losses were concentrated. Layoffs in the sectors increased in December to 500,000 from 437,000 in November. At the same time, hires in the sector dropped to 777,000 from 1.1 million. While this sector continues to be constrained by the virus, it is promising that these industries did not shed more workers.
Another positive sign was that the ratio of unemployed workers to job openings did not increase in December. The number of jobs may have declined, but job seeker competition for new jobs does not appear to have increased. In all, this report indicates that while the labor market took a hit, the blow was not as severe as the tidal wave of layoffs we saw last spring.