Hiring Increased in February, but the Talent Shortage Persists
The Bureau of Labor Statistics February 2022 JOLTS report indicates hiring increased and turnover remained elevated. Hires increased by 263,000 to 6.7 million and quits increased slightly to 4.4 million, while job openings remained steady at 11.3 million.
Labor shortage continues. Job openings remain elevated at 11.3 million – just a bit lower than December’s record 11.4 million. While it’s good news that job openings have stabilized over the past few months, the pool of available talent has been shrinking. The unemployment rate sits at 3.8%, and just 6.3 million workers are available to fill those open roles. With the low unemployment rate and elevated job openings, the ratio of job openings to unemployed workers is at a record-high – there are currently 1.8 job openings for each of the 6.3 million unemployed workers.
Hiring picks up. In February, the economy added a surprising 678,000 net new jobs, representing about 1 in 10 of the 6.7 million total hires in the JOLTS report. The 6.7 million total hires include those who switched jobs as part of the Great Resignation or Great Reshuffle.
Turnover remains elevated. Quits increased by just under 100,000 to 4.4 million in February. Most workers quit their jobs with another opportunity – for higher pay, better benefits or more flexibility – already lined up. These job-switchers contribute to the 6.7 million total hires as part of the employment life cycle from job openings to hires to quits and separations.
Compensation drives turnover. Compensation tends to be a major reason workers leave their jobs for new opportunities. Analysis from LaborIQ indicates that many jobs – such as data analyst, human resources manager and software engineer – show gaps of 10% or more when comparing in-place salaries versus compensation the market is commanding today. This means that the salaries needed to attract new talent will need to rise to meet the competition. And businesses will need to assess compensation structures to ensure fair pay and improve employee retention.
The tight labor market and turnover are likely to subside somewhat but remain elevated in 2022. LaborIQ® projects 207 million total job openings, hires and quits in 2022, highlighting the demand for talent acquisition professionals and the pressures they face as companies compete to hire and retain talent.
However, the Russia-Ukraine war and interest rate increases add additional uncertainty to the hiring outlook. This Friday’s jobs report will shed some light on how these factors impacted the labor market in March.
Note: The Job Openings and Labor Turnover Survey (JOLTS), by the U.S. Bureau of Labor Statistics (BLS), tracks the volume of job openings, hires, quits and other separations, reported on a two-month delay.