According to the Bureau of Labor Statistics JOLTS data (Job Opening and Labor Turnover Survey), private sector hiring, while still ahead of 2011, has slowed. The JOLTS data record information on the number of persons hired by establishments and not merely total employment. Thus the JOLTS data can provide information on whether companies are hiring new workers and replacing workers who have left their jobs or whether they are holding back on hiring.
According to the JOLTS data there were 12.73 million workers hired by private sector employers from August through October in 2012. This represents only a 1.34% increase from the same three months in 2011. The increases for 2009-2010 and 2010-2011 were 5.03% and 6.92% respectively, for the same three-month period. Moreover the number of workers hired remains 16% lower than it was in 2007, before the recession. Hiring in goods-producing industries (mining, construction and manufacturing) actually fell by 4.3% in the past year to the lowest level since 2009.
The slowdown in hiring may be due to uncertainty about the economy, including the budget negotiations in Washington. Another sign that economic uncertainty may be impacting the labor market is that the pace at which workers are quitting their jobs has slowed down as well.
The number of workers quitting their jobs is an important indicator of how sure workers are that they can find a new higher-paying job. When the labor market is booming more workers are willing to quit their jobs for better opportunities. From 2009-2010 and 2010-2011 the number of private sector workers who quit their jobs increased by 12.2% and 9.7% respectively (based on data from August through October of each year). In the past year the number of workers quitting their jobs increased by only 1.5% and remains about 26% below pre-recession levels.
The non-farm total payroll employment data from the BLS indicate that the economy has added about 136,000 private sector jobs per month over the past six months – or just enough to keep pace with population growth. The JOLTS data indicate that the pace at which companies are hiring workers and the pace at which workers are quitting their jobs has slowed, after two years of solid increases in both hires and quits.
The labor market recovery is still fragile. Both employers and workers may be holding back on decisions awaiting the outcome of Federal budget negotiations and the resolution of uncertainty about tax rates and government spending. If the policy compromises by Congress and the President raise the cost of doing business, including the hiring and retention of workers, the gains in employment we have seen over the past two years could be reversed in 2013.