This week the BLS released the Job Openings and Labor Turnover Survey (JOLTS) for November and the Employment Situation for December this week. Together, these reports provide an updated look at the status of the labor market. Given that the reports reflect data from the end of November and the week containing December 12th, respectively, they do not provide direct evidence of the impact that elevated Omicron cases are having on the labor market.
Together, the two reports show a strong labor market whose continued growth is being held back by a shortage of workers. First, the headline numbers from the jobs report were that payroll employment increased by 199,000 workers in December and the unemployment rate declined to 3.9 percent. While the growth in employment was again lower than anticipated, the revised data from the previous 2 months added an additional 141,000 jobs (an increase of 102,000 in October and 39,000 in November). Together, these increases in employment over the past three months show an economy that is still adding jobs at a rapid rate given the low unemployment rate.
Second, the data from JOLTS showed that the number of job openings remained near its all-time high at 10.6 million (this compares with only 6.3 million unemployed workers). There were 6.7 million new hires and 6.3 million job separations in November, both elevated compared to pre-pandemic levels. Interestingly, the number of quits hit a record high of 4.5 million. This report further highlights a labor market where firms have a strong demand for hiring more workers but are not able to add workers as quickly as they would like. This challenge in expanding employment for firms reflects both the greater demand than available labor and an elevated quits rate that makes it difficult to expand the number of employed workers.
Going forward, it is likely that labor disruptions due to Omicron will continue to make it challenging for firms to maintain the labor force. The December employment situation showed that the labor force participation rate remained at 61.9 percent. For the labor shortage to subside, more individuals will need to enter the labor force. We can hope that this will begin to happen if the risks associated with the pandemic begin to subside after the Omicron wave.
