Why was I so excited that 150,000 jobs were created in October? Well, it was a positive number for the labor market and more in line with a sustainable pace, but the real reason was a bit more selfish than that. ERE Media’s new vice president of research, Kevin Grossman, had just put me on the spot during the CandE’s conference the previous morning. He asked my prediction for the soon-to-be-released report, and probably for the first time ever, I was exactly right. (And yes, Kevin received an email from me immediately the next morning.)
The Influence of Industry Differences
Now, let’s put a few asterisks next to that number. First, it likely would have been closer to 180,000 jobs gained if not for the auto-workers strike. The impact of that strike was high enough that it resulted in the manufacturing industry showing fewer jobs in October than when the year started. The industry has other challenges, as well, but the strikes definitely made an impact.
Information is the only other industry with fewer jobs now compared to the beginning of the year, and it has had to work through tech layoffs and strikes in the entertainment industry.
Next, job gains for the previous couple of months were revised downward once again. And it just so happens I gave Kevin that prediction, as well. The previous two months produced 101,000 fewer jobs than originally projected. I’ve written that the job market does not seem as strong as the numbers being reported, and the consistent revisions are proving that opinion to some degree.
Finally, job gains were once again very concentrated by industry. Other than manufacturing and information, all other industries have more jobs today than at the beginning of the year, but only healthcare and government are sustaining strong growth on a regular basis. The two combined for 109,000 of the gains in October, a little more than two out of three jobs added.
The Continuing Role of Quits
Voluntary turnover continues to tick down. As of September, the latest data available, it was at 2% for the month based on seasonal adjustments. Note that I have excluded leisure and hospitality from that number since they skew the overall trends a bit. If voluntary turnover held at that pace for the next year, it would equate to an annualized rate of 24%, or one in four employees quitting for new roles over the course of a year. The same metric was as high as nearly 33% in November 2021.
Now, those voluntary turnover metrics might sound high or low depending on your industry. Annualizing the latest monthly rate gives a range of 9.6% for government on the low end, and 60% for leisure and hospitality on the high end. While voluntary turnover is coming down, expect it to remain elevated as a shortage of talent means businesses will continue to rely on passive candidates and poaching in order to fill open roles.
In the same presentation at the CandE’s conference, I was asked if we noticed any changes in the reason people are leaving their jobs today compared to a year ago. My focus was more the changes in reasons they are not leaving.
One of the key reasons is people are not getting as much of a pay increase when they switch their jobs. In the summer of 2022, the average increase in pay when switching jobs was 8.4% according to the Federal Reserve Bank of Atlanta. The latest total is 5.6%.
More active candidates and fewer jobs at the upper end of the salary bell curve contribute to the trend. Additionally, the number of remote or hybrid opportunities is shrinking and the demand for those jobs remains elevated.
As we wrap up the year, things to watch out for include consumer spending, due to its impact on business revenues, inflation, and as a sign of consumer confidence; how government shutdowns and strikes will influence hiring in certain industries; and, finally, the talent shortage and its effect on retention and wage growth.