Job openings mask cooling labor demand

November 20, 2023

Job openings increased by 56,000 to 9.6 million in September, marking the second consecutive month of growth after an increase of over half a million job openings. That was the highest level since June. However, the figure remained 15% below the 2022 average and 4% under the 2021 average. Overall, demand has significantly moderated.

At the state level, the most significant declines in job openings were observed in Illinois, Massachusetts and Utah, with those three states reporting 81,000 fewer job openings in September. However, that decline was almost entirely offset by a surge in Tennessee. Tennessee's total job openings reached an all-time high of 309,000 in September. The state's unemployment rate hovered near its historical low of 3.2%. The tight labor market is prompting employers to intensify competition in the war for talent.

The ratio of job openings to unemployed job seekers remained steady at 1.5 in September. In total, 41 states, including the District of Columbia, recorded a ratio equal to or exceeding the national average, the same as in August. The Dakotas, Maryland, New Hampshire and Vermont posted ratios of three higher, indicating more than three job openings for every unemployed job seeker. In contrast, densely populated states like California, New York and Texas exhibited some of the nation's lowest ratios, at or just above one. No state reported a ratio below one in September, signaling that tight labor markets are still a widespread phenomenon across the country.

Hiring also accelerated in August, with declines in Texas being offset by increases in Pennsylvania, Ohio and Colorado. Florida saw an increase of 36,000 hires in September, bringing the total to 426,000, the highest since June 2022. As the state's economy expands rapidly, the hiring of more workers continues. California experienced positive hiring numbers following a significant decline in August. This trend is partially corroborated by private job posting websites, indicating that hiring in the tech and transportation sectors has stabilized after a slowdown earlier in the year.

Layoffs decreased by 165,000 in September, with Illinois, Arizona and Wisconsin experiencing the largest declines. Minimal spillover effects were observed from the writers' and actors' strikes. The onset of the United Auto Workers’ (UAW) strike did not significantly impact September layoffs. However, as the UAW strike intensified in October, potential repercussions in the manufacturing sector in Midwestern states are anticipated once data becomes available.

In September, the total number of quits remained roughly unchanged. Most states have now reverted to their 2019 quits levels. A consequence of those lower rates is the continuing narrowing of the wage premium for job hoppers. According to payroll processing company ADP, job changers saw less than a 9% wage increase, a stark contrast to the peak of 16% from April to August 2022. Additionally, wages for new job postings have been on a declining path.