Job Openings in Flux: How to Use JOLTS and Hiring Trends to Understand the Labor Market

Recent Trends: Job Openings Fell and Unmet Demand

On Wednesday, the Labor Department reported on the U.S. labor market. Job openings were little changed at 7.7 million in July 2024, down by 1.1 million over the year. The job openings rate stood at 4.6%. This change signals a shift in economic activity and aligns with recent workforce trends identified by Aura’s data, which showed broad declines in advertised jobs and hirings.

Aura’s September hiring trends report showed a 10% decrease in US jobs and a 9% decrease in job postings across North America, with retail, hospitality, and construction among the hardest hit. Major states like California and Florida (both -18%) and Texas (-13%) saw steep drops, while New York experienced a more moderate decline of 5%. These regional variations illustrate how economic conditions are playing out differently across the U.S. Globally, most regions also saw a decline in job postings, except for LATAM, which stood out with a 9% increase.

Data from the Bureau of Labor Statistics (BLS) presents a nuanced view of the labor market. In July 2024, job openings as mentioned were little changed at 7.7 million, with certain sectors experiencing significant shifts. While job openings increased in professional and business services (+178,000) and federal government (+28,000), declines were notable in health care and social assistance (-187,000), state and local government, excluding education (-101,000), and transportation, warehousing, and utilities (-88,000).

These variations highlight ongoing labor market adjustments, which may be influenced by economic factors, including the Federal Reserve's efforts to manage inflation.

Meanwhile, unmet demand continues in sectors like high-tech and artificial intelligence, where the availability of qualified workers remains limited. As businesses face this talent shortage, the labor market sees increased competition for skilled professionals. Additionally, shifts in hiring practices, including the use of automation and outsourcing, may be contributing to the evolving dynamics of job openings and workforce distribution.

It’s also worth noting that the March 2024 data was recently revised down, the largest such revision since 2009. This further illustrates the ongoing adjustments in the labor market and the difficulties of properly analyzing its nuances.

But what’s driving these shifts in the labor market? To get a clearer picture, we need to get into the data that provides valuable insights into the changing workforce landscape—starting with JOLTS.

What We Learn from JOLTS (Job Openings and Labor Turnover Survey)

At its core, JOLTS is a comprehensive tool for understanding the labor market. The Job Openings and Labor Turnover Survey provides a snapshot of critical labor metrics like job openings, hires, and total separations, giving insights into how businesses across different sectors are managing their workforce. But what makes JOLTS so valuable? What can these numbers actually tell us about the state of the economy? And how can you analyze it to glean insights into labor statistics that drive decisions?

Understanding JOLTS data can unlock a wealth of knowledge, but how exactly does this survey help us interpret the labor market? Let’s break down its core components to see what they reveal.

Core Components of JOLTS

1. Job Openings: These represent available positions that remain unfilled, indicating unmet demand. Job openings are counted based on the last business day of the month, providing a consistent measure of labor demand. A job opening is counted when businesses actively seek to hire, making this metric a primary indicator of labor demand. For example, a spike in professional and business services job openings could signal that the sector is expanding, but a drop could indicate a cooling in demand.

2. Hires: This metric tracks the number of monthly workers added to payrolls, providing insights into how effectively businesses are filling vacancies. A high hire rate often reflects a strong labor market, whereas a lag in hiring could indicate difficulty finding suitable talent.

3. Total Separations: This captures the total number of workers who leave their jobs voluntarily (quits) or involuntarily (layoffs and discharges). High rates of voluntary separations can suggest that workers feel confident in finding new jobs, while rising layoffs can be an early indicator of economic distress.

Now that we’ve outlined the main metrics, the next step is knowing how to interpret them effectively. Here’s how to approach JOLTS data to gain deeper insights into labor trends.

How to Study JOLTS Data

The value of JOLTS lies in its ability to reveal trends that may not be immediately apparent through other economic indicators. By studying JOLTS data, you can gain an understanding of the supply and demand dynamics in the labor market, sector-specific labor shortages, and even regional labor conditions. Here’s how to approach it:

1. Look at Job Openings by Sector: When you break down job openings by industry, you’ll notice that some sectors consistently have higher demand than others. For example, health care (excluding education) often has steady job openings, reflecting the growing demand for services and the limited supply of skilled workers.

2. Analyze Hires and Separations Together: High hires and total separations can indicate high turnover rates, which are common in sectors like accommodation and food services. By analyzing these two metrics, you can identify industries where workforce churn is a significant challenge.

3. Regional and Sector-Specific Trends: JOLTS also provides detailed data on how labor trends vary by region. For instance, state and local governments may see rising job openings in one region while another faces a glut of workers. This data type is essential for state and local government decision-makers who rely on labor market data to plan training programs or make hiring decisions for public sector jobs.

Analyzing these metrics gives us a clearer view of the market, but what should businesses and policymakers do with these insights? Let’s explore how JOLTS data can shape strategies and decisions.

What to Do with JOLTS Insights

For policymakers, businesses, and other economic research researchers, the insights provided by JOLTS are invaluable. Here’s how you can leverage JOLTS data:

1. Policy Decisions: Policymakers, especially in the federal and local governments, use JOLTS data to craft labor policies that address key challenges like unmet demand in critical sectors. For example, a sudden rise in job openings in transportation could lead to increased investment in workforce training programs to fill positions related to logistics and infrastructure.

2. Business Strategy: Businesses can analyze JOLTS data to assess labor market conditions in their industries. A company facing high turnover might use the data to revise its employee retention strategies or invest in more competitive compensation packages. Similarly, industries like engineering or professional services experiencing labor shortages may need to rethink their hiring processes to attract top talent.

3. Economic Research and Forecasting: Economic researchers and analysts use JOLTS with other indicators like the unemployment rate to forecast economic conditions. For example, a drop in job openings in the previous month in professional services could signal an economic slowdown. In contrast, a surge in hiring in food services may reflect growing consumer demand in the sector.

How Does the Gig Economy Fit In?

The rise of the gig economy has added complexity to traditional labor metrics like JOLTS. For years, existing surveys like the Current Population Survey (CPS) struggled to capture the expected full scope of gig work. JOLTS often underrepresented the number of workers engaged in nontraditional labor arrangements.

To address this gap, the BLS is set to release a new gig economy survey that will offer deeper insights into the dynamics of gig work. This survey aims to track workers who take on multiple jobs, rely on gig work for supplementary income, or work for major gig platforms like Uber and DoorDash. As companies like Uber report millions of active earners, it’s becoming increasingly critical for the government to report on and understand how gig work contributes to the overall labor market.

Of course, understanding layoffs is another key part of the labor market puzzle. How do layoffs and job opening trends help us predict broader economic shifts?

Layoffs and Labor Market Signals

Another vital aspect of JOLTS is its focus on layoffs. While layoffs are a natural part of the economic cycle, a sharp rise can indicate troubling trends. For instance, layoffs in engineering or professional services might signal broader industry shifts due to economic downturns or changing business models.

Tracking layoffs over time helps businesses and policymakers anticipate disruptions. A rise in layoffs combined with falling job openings can foreshadow a potential recession while declining layoffs and rising job openings can point to economic recovery. Layoffs can offer early warnings about economic changes, but they’re just one piece of the puzzle. To fully understand the labor market, JOLTS remains a critical tool for decision-makers.

JOLTS as a Tool for Understanding the Labor Market

The Job Openings and Labor Turnover Survey remains vital for analyzing the U.S. labor market. It provides critical insights into job openings, hires, and separations across professional and business services, health care, and transportation sectors. These insights are invaluable for policymakers, businesses, and economic researchers seeking to make informed decisions in a rapidly changing economy.

As labor trends continue to evolve—especially with the rise of the gig economy—JOLTS data will be even more crucial. By combining traditional labor metrics with emerging data on gig work, the BLS can provide a clearer, more accurate picture of the modern labor market, enabling better forecasting, policy-making, education, and strategic decision-making for businesses nationwide.

But to truly stay ahead, you need more than just one data source. Combining JOLTS with real-time insights from platforms like Aura can provide a powerful advantage in understanding workforce dynamics.

How to Use JOLTS and Aura for Business Insights

Understanding the labor market is no longer about looking at just one data set. Tools like JOLTS offer a foundational view of the overall job market, providing insights into job openings, hires, and separations. However, integrating these insights with Aura's workforce analytics can take your understanding to the next level.

Aura provides real-time, industry-specific data that complements JOLTS metrics, allowing businesses to adapt to dynamic hiring trends and labor market shifts. Whether identifying cost optimization projects through workforce optimization, conducting due diligence on companies for acquisition, or navigating the complexities of regional and sector-specific talent shortages, combining JOLTS data with Aura’s platform enables businesses to stay ahead.

Using JOLTS and Aura's actionable insights can unlock new opportunities for businesses seeking to optimize workforce planning, mitigate risks, and drive strategic decision-making. This dual approach equips leaders with a powerful understanding of macroeconomic labor trends and detailed, sector-specific workforce intelligence, ultimately enabling more informed, data-driven decisions in today’s evolving job market.