Jack Dunn - Reclaiming Common Sense

This past week we received the August Employment Situation Report, or Jobs Report. Today we received the July JOLTS report, or Job Openings and Labor Turnover Survey. There has been some conflating of the data received in the JOLTS report and the data received in the Jobs Report.The JOLTS data most closely resembles the Current Employment Statistics (CES) data, or Establishment data The Unemployment data comes from the Current Population Survey (CPS) data, or Household data. The CPS data measures the number of full-time jobs, part-time jobs, and unemployed workers, as well as estimates the workforce population. The CES data measures the number of workers, private sector workers and non-farm payroll workers. The JOLTS data measures "Hires and fires," with the Job Openings Data, the "Quits" data, the "Hires" data and the total separation data. This column has already written a number of articles regarding the July Data:

Jobs hit their traditional annual peak during July, Full-time jobs spiked, part-time jobs dropped a little, workers were reported as growing by 170,000, when the upward revisions to the prior data are factored in 215,000 seasonally adjusted (SA) private sector workers were added to the economy between June and July this year. Unemployment fell below 6.8 million, and participation rose.


The wages and workers article detailed how Education and Health Services (EHS,) Trade, Transportation and Utilities (TTU,) Other Services (OS,) and Government sectors saw month to month drops in non-seasonally adjusted (NSA) CES workers. We saw a July to July decline in Information Technology (IT) workers while all the other sectors had more workers than the prior July. All sectors saw a pay increase from their weekly average wage level one year prior. The largest pay gains were in Professional Business Services (PBS,) Construction (Const.) These three super sectors received growth in their average weekly wages greater than the average gain of 2.97% non-seasonally adjusted. The smallest gains were in Other Services (OS,) Information (IT,) and Manufacturing (Manf.) Recently we have seen spikes in "Quits" and Total separations in the LAH, OS, TTU, and PBS. The LAH, OS, TTU, and EHS  sectors are the four lowest paid sectors. Low wages, High Quits. What was recorded and what was reported in the July JOLTS report?


July Record Level of Job Openings. The headline elsewhere is that there are more job openings than unemployed workers. The number of non-seasonally adjusted job openings is 7.313 million jobs. The number of non-seasonally adjusted unemployed workers was 6.730 million workers. The thing is that the workforce participation rate for July was 63.50%. This was not the lowest participation rate during the month of July since 2001, it was very close. It was not as good as July 2014. It was better than July 2015, 2016, and 2017. July 2007 it was 66.77%.


The Job Openings are in Transportation, Trade, Utilities (TTU,) Education and Health Services (EHS,) Professional and Business Services (PBS) and Leisure and Hospitality (LAH.) Three of these sectors, TTU, LAH, and EHS, were in the four lowest paying sectors during July. The Other services sector was the second lowest paid sector. The lowest was LAH.


We had a record level of Quits, for any month, during July. Over 4 million people quit jobs during July. We had come close to 4 million quits during 2017 and 2016. Prior to the recession the peak was 3.854 million quits during 2006. It comes as no surprise that the top sectors for quits were LAH, PBS, TTU, and EHS.


We set a record for Hires during for Month of July This year. There were 6.124 million hires during July. We had a higher level of Hires during June. We had not eclipsed 6 million Hires, consistently until 2017. The largest sectors for Hires this month were TTU, PBS, LAH and EHS. The same for sectors in slightly different orders for Job Openings, Quits, and Hires.


Shocker: Wages Matter. If you were to look at the order of Job Openings, Hires, Quits, and wages (Note: wage data for July is the Advance Weekly wage data.)

  • Job Openings (Highest first) TTU, EHS, PBS, LAH
  • Quits (Highest first) LAH,  TTU, PBS, EHS
  • Hires (Highest First) TTU, PBS, LAH, EHS
  • Wages (Lowest first) LAH, OS, TTU, EHS, Manuf.

The month changes, the data "stays the same." Three sectors with the lowest wages have the most Job Openings, the largest number of Quits, and the most number of Hires. The good news is that the LAH sector received the second largest average weekly pay raise. Could this add some stability to the JOLTS data? Time will tell.


The problems that are present with the JOLTS data are many. The data is grouped by region, Northeast, South, Midwest, West. The JOLTS data does not specify whether or not the jobs are seasonal jobs or permanent jobs. The JOLTS data does not specify whether or not these are full-time or part-time jobs. This data..



The other scenario is true: The Higher paying jobs have some of the lowest jobs openings, lowest hires, and lowest quits.

  • Job Openings (Lowest first) M/L, IT, Construction, Financial Service (Fin)
  • Quits (Lowest First)  M/L, IT, Fin, Construction, Manuf
  • Hires (Lowest First) M/L, IT, Manuf, Construction, Fin
  • Wages Highest First M/L, IT, Fin, PBS and Construction

Wages matter. The highest paying jobs have the lowest level of Quits, the lowest level of Hires, and the lowest levels of Job Openings.


We are seeing the average weekly wag rise because the higher paying jobs, with fewer employees, and the lower paying sectors, with the highest level of employees, are all getting pay raises. Quits, Hires, and Job Openings have been rising since 2010.  We may be seeing some "rotation" from lower paying jobs to higher paying jobs. We may be seeing difficulty in filling job openings because employers do not want to pay more for workers and workers want to be paid more for their work. Some of the wage increase may be as a result of changes to state minimum wage laws. If the average weekly wage is $944 and people are working 40 hours a week the average hourly wage is $23.60.  LAH is averaging $10.58 an hour. Leisure and Hospitality is the fourth largest sector. We may see more rapid wage growth as LAH is trimmed and M/L, Construction, and Manuf, continue adding jobs and workers.


It's the economy.