Employment opportunities are growing
Job openings are increasing.
As in December, all 50 states and the District of Columbia had more job openings than job seekers. Job openings numbers increased in 13 states. Texas, Illinois and Michigan contributed about 43% of those openings, with 244,000 job openings. The rate of job openings nationwide increased to 6.7% from 6.3%.
The ratio of job openings to job seekers climbed to 1.9 in December. For every unemployed person, there were close to two jobs available. The District of Columbia and 30 states had ratios greater than or equal to the national level. The Dakotas and D.C. had ratios equal to or above 3.0, so that means three job openings per job seeker.
Across the country, higher quits levels continued to pressure employers to offer higher wages. Quits levels stayed at 2.7%. As the most recent data from payroll company ADP show, job switchers are enjoying double the pay rise compared to job stayers. Higher quits led to higher job openings and hires as businesses needed to find new talent when their previous employees left. Higher wage increases are likely to last for some time. Additionally, as the labor shortage has become more secular or long-lasting rather than cyclical or short-term, it may take some time for the Federal Reserve to bring the ratio of job openings to unemployed workers back to its target of about one to one.
Meanwhile, the quits level dropped in California. As tech companies implement hiring freezes, the ones who were not laid off have faced fewer opportunities to switch employers in the tech sector. Layoff and discharges increased in California (58,000). Large layoffs in the technology and information sector contributed to higher layoffs there. December was the first month we started to see this. With recent layoff announcements, more layoffs will continue to appear in the data in the next few months. However, those job skills are in high demand in other sectors.
The Bottom Line:
Employment reshuffling had not seen any signs of slowness by the end of 2022. With strong employment growth in January and muted unemployment insurance claims so far this year, it is hard to believe that the labor market will cool significantly. The Fed still sees more rate hikes on the table for 2023.