What Is the Job Openings and Labor Turnover Survey (JOLTS)?
The Job Openings and Labor Turnover Survey (JOLTS) is a monthly survey conducted by the U.S. Bureau of Labor Statistics (BLS) that provides data on job openings, hires, and separations (quits, layoffs, and discharges) for the nation. It is a key economic indicator within labor economics, offering insights into the dynamics of the labor market and the unmet demand for employment. The JOLTS report is closely watched by economists, policymakers, and market participants to understand the balance between labor supply and demand.
History and Origin
The Job Openings and Labor Turnover Survey (JOLTS) program was established by the U.S. Bureau of Labor Statistics in December 2000. Prior to JOLTS, comprehensive data on job vacancies and labor turnover were not consistently available at the national level. The development of the survey aimed to fill this gap, providing a more complete picture of the U.S. labor market beyond what traditional unemployment figures alone could offer. The BLS continually refines its methodologies for the JOLTS program to enhance data accuracy and relevance.10
Key Takeaways
- The Job Openings and Labor Turnover Survey (JOLTS) provides monthly data on job openings, hires, and separations in the U.S.
- Job openings reflect the unmet demand for labor, while hires indicate the number of new employment relationships.
- Separations include quits (voluntary departures), layoffs (involuntary departures initiated by the employer), and other separations.
- The quits rate is often viewed as a measure of worker confidence in the ability to find new employment.
- JOLTS data is a critical input for the Federal Reserve's assessment of labor market conditions when formulating monetary policy.
Interpreting the JOLTS
Interpreting the Job Openings and Labor Turnover Survey (JOLTS) involves analyzing the various components to gauge the health and direction of the labor market. A high number of job openings, particularly relative to the unemployment rate, suggests strong labor demand, indicating that businesses are actively seeking to expand or replace departing workers. Conversely, a declining number of job openings can signal a cooling or weakening labor market.
The hires component measures the total number of additions to payrolls, representing new employment relationships. An increase in hires generally points to robust hiring activity.
Separations are broken down into three categories: quits, layoffs and discharges, and other separations. The quits rate is particularly significant, as it indicates the percentage of employees who voluntarily left their jobs. A high quits rate suggests worker confidence, as individuals are more likely to leave a job if they are confident in finding better opportunities elsewhere, potentially leading to upward pressure on wage growth. Conversely, a rising layoff rate can signal economic weakness or impending recession. Analyzing these components in conjunction provides a nuanced understanding of labor market fluidity and underlying economic trends.
Hypothetical Example
Consider a hypothetical scenario where the latest Job Openings and Labor Turnover Survey (JOLTS) report shows 8 million job openings, 5.5 million hires, and 5 million total separations. Within separations, 3.5 million are quits, and 1.5 million are layoffs and discharges.
In this example, the relatively high number of job openings (8 million) indicates that there is substantial demand for labor across the economy. The 5.5 million hires suggest that a significant number of these open positions are being filled. The 3.5 million quits, which account for a large portion of total separations, imply that workers are confident in their ability to find new positions, choosing to leave their current roles voluntarily. This confidence is a positive sign for workers, as it suggests opportunities are available. If, in a subsequent report, layoffs significantly increased, it could indicate a shift in the labor market, potentially signaling a slowdown in economic growth.
Practical Applications
The Job Openings and Labor Turnover Survey (JOLTS) data serves multiple practical applications across financial analysis, policymaking, and business strategy.
For economists and policymakers, JOLTS data is a crucial input for assessing the tightness of the labor market. The Federal Reserve closely monitors JOLTS figures, particularly the ratio of job openings to unemployed persons, as a gauge of inflationary pressures and the overall health of the economy. A persistently high ratio of job openings to available workers can indicate a tight labor market, potentially leading to wage growth and inflation, which may influence decisions on interest rates.9
In financial markets, traders and investors use JOLTS data to anticipate shifts in monetary policy and to inform their investment decisions. Strong job openings and high quits rates can be interpreted as positive signals for corporate earnings and consumer spending, while a significant rise in layoffs might signal an impending economic downturn.
Businesses utilize JOLTS data to understand labor market trends within their industries and regions. This information can inform staffing strategies, recruitment efforts, and compensation decisions. For instance, if a particular industry shows a consistently high job openings rate, businesses in that sector may need to adjust their compensation packages or recruiting methods to attract talent. The Bureau of Labor Statistics provides detailed JOLTS data that can be explored by industry and region, offering granular insights.8
Limitations and Criticisms
While the Job Openings and Labor Turnover Survey (JOLTS) provides valuable insights into labor market dynamics, it is important to acknowledge its limitations and criticisms. One significant concern is the definition of "job opening." A position is considered open if there is work available, the job could start within 30 days, and there is active recruiting. However, "active recruiting" can encompass a wide range of efforts, from actively interviewing candidates to simply posting a job online with little intention of immediate hiring. This broad definition can potentially inflate the reported number of job openings, as employers might post roles defensively, to "ghost" candidates, or to test the market, rather than genuinely seeking to fill a position quickly.7
Another criticism relates to the survey's methodology and its potential for sampling and non-sampling errors inherent in any survey-based data collection.6 While the BLS continuously works to improve its methodology, differences in definitions and reference periods compared to other labor market surveys, such as the Current Employment Statistics (CES), can sometimes lead to discrepancies in implied employment change.5 For example, a "job opening" in JOLTS might not correspond directly to a new job created in the CES. Furthermore, JOLTS data can lag other labor market releases, potentially providing a slightly delayed picture of current conditions.4 These factors suggest that JOLTS data should be analyzed in conjunction with other economic indicators for a comprehensive understanding of the labor market.
JOLTS vs. Unemployment Rate
The Job Openings and Labor Turnover Survey (JOLTS) and the unemployment rate both provide critical information about the labor market, but they measure different aspects. The unemployment rate focuses on the supply side of labor, specifically the number of people who are actively seeking but unable to find work. It is typically calculated as the percentage of the labor force that is unemployed. A low unemployment rate generally indicates a tight labor market where workers are relatively scarce.
In contrast, JOLTS primarily focuses on the demand side of labor, measuring the number of job vacancies employers are trying to fill. While the unemployment rate tells us how many people need jobs, JOLTS tells us how many jobs are available. JOLTS also provides crucial insights into labor market fluidity through its data on hires and separations (quits and layoffs), which the unemployment rate does not directly capture. For instance, a high quits rate within JOLTS suggests worker confidence, as individuals are voluntarily leaving jobs, which is not reflected in the unemployment rate. Analyzing both measures provides a more complete picture: the unemployment rate indicates how many workers are seeking jobs, while JOLTS shows the availability of jobs and the churn within the market.
FAQs
What are the main components of the JOLTS report?
The main components of the Job Openings and Labor Turnover Survey (JOLTS) report are job openings, hires, and total separations. Total separations are further broken down into quits, layoffs and discharges, and other separations.
How often is the JOLTS report released?
The JOLTS report is released monthly by the U.S. Bureau of Labor Statistics (BLS), typically about 35 days after the end of the reference month.3
Why is the quits rate important in JOLTS?
The quits rate in the Job Openings and Labor Turnover Survey (JOLTS) is considered an important indicator of worker confidence and the overall health of the labor market. When the quits rate is high, it suggests that workers are confident in their ability to find new or better jobs, indicating a robust job market with ample opportunities.
How does the Federal Reserve use JOLTS data?
The Federal Reserve closely monitors JOLTS data, particularly the number of job openings and the quits rate, to assess the tightness of the labor market. This information helps them understand the balance between labor supply and demand and potential pressures on wage growth and inflation when making decisions about monetary policy and interest rates.2,1
Does JOLTS measure new jobs created?
JOLTS measures job openings, which are vacant positions employers are actively trying to fill. It also measures hires, which are new employment relationships established during the month. While hires contribute to overall employment figures, JOLTS itself is not designed to be a direct measure of net job creation, which is typically captured by surveys like the Current Employment Statistics (CES).