By Marilyn Cannon, Regional Economist

What is JOLTS?

Every month the Bureau of Labor Statistics (BLS) publishes a dataset called JOLTS — the Job Openings and Labor Turnover Survey. This dataset is produced by surveying 21,000 business establishments throughout the United States about employment and payroll details. JOLTS provides labor market data such as the number of hires, job openings, and separations, on a national and state level. JOLTS is useful in showing movement within a labor market and demonstrating the health of an economy.

Accessing JOLTS Data

JOLTS data is publicly available and found on the BLS website. Selecting either “one screen” or “multi screen” on the JOLTS databases page, allows users to walk through and select data of interest.

One of the advantages JOLTS data has over similar datasets is the recency of available data. New data is released monthly and only lags 2-3 months behind real time. A limitation resulting from getting the data so quickly is that the JOLTS dataset is very broad, and has few options for pulling more specific data. For example, labor market movements for an individual industry, such as healthcare and social services, are only available on a national level. Data is also only available on a state or multistate level, with no estimates for smaller regions within a given state. 

Usefulness of JOLTS Data

One of the main indicators JOLTS publishes is total separations. Examining the component parts of total separations can give insight into how workers and employers perceive the health of the labor market. For example, when workers are confident in labor market conditions, they tend to be more willing to quit their jobs as they are confident in finding new employment. Conversely, when labor market conditions are less robust, quit rates tend to be lower as workers have less confidence in landing a new job. 

The total separations measure in JOLTS is made up of three components: quits, layoffs and discharges, and other separations. Quits are defined as employees leaving a job voluntarily, while layoffs and discharges are defined as involuntary separations initiated by the employer. Involuntary separations include layoffs with no intent to rehire, the elimination of a position, discharges resulting from mergers, the end of seasonal jobs, firing or other discharges for cause and layoffs expected to last more than a week. These two components — quits and layoffs and discharges — make up the majority of all separations. The third component of total separations is “other separations” and includes retirements, transfers to other locations, deaths and separations due to employee disability. Typically “other separations” make up a very small fraction of total separations.

Analyzing the numbers and types of separations provides insight to the state of the labor market. Quits can be a signal of strength in the labor market as they indicate the general feeling of workers. In times of economic prosperity, quits make up the majority of total separations as employees feel confident in their ability to find another job and are more likely to leave their current employment in search of a better opportunity. At the same time, layoffs and discharges tend to be low in a strong economy because employers might not be looking to reduce their workforce.

During economic downturns, layoffs and discharges rise to replace quits as the largest fraction of total separations. The rates of quits fall during economic downturns as workers lose confidence in the labor market and their ability to find another job. This makes them more likely to stay where they are currently employed while there’s uncertainty in the economy. Contributing to the rise of layoffs and discharges over quits is an increase in layoffs and discharges in times of recession as companies need to cut costs for survival, which often comes by laying off employees, either temporarily or permanently, and eliminating positions. 0

Typically, layoffs and discharges rise only after a recession begins, as companies want to avoid the arduous process of hiring again when the economy recovers. This makes layoffs and discharges a poor leading indicator of a recession, as it tends to move only in response to a recession. Quits, on the other hand, often begin to slow in the months leading up to a recession as uncertainty rises and confidence in the labor market declines. However, this only occurs when a recession is not caused very suddenly by an outside, unpredictable shock. In the case of the 2020 recession, quits did not fall ahead of time because there was no gradual decline into recession that prompted workers to stay in their current positions.

Looking at graphs of Utah and the United States over the past 20 years shows that quits are above hires unless the economy is in a recession. The past eight years, with the exception of the 2020 recession, have had a higher percentage of quits as a fraction of total separations than has historically been the case, which are signs of a tight labor market. Employees are feeling confident that there are other, better jobs available to them and are leaving their current employers at faster rates than they were in the past. 

At the same time, employers are facing increased difficulty finding workers and filling positions, making them reluctant to lay off current employees. This is illustrated in the graphs below, where the number of total layoffs and discharges in Utah and the United States stay steady or even dip slightly following the 2020 recession. The increase of quits, while layoffs and discharges remain relatively unchanged, contributed to the widening gap between quits and layoffs and discharges as a percentage of total separations in the labor market.

With a tighter labor market, employees are more willing to leave their jobs and employers have strong incentives to avoid layoffs and discharges. In looser labor markets, when there are more job seekers than openings, the opposite happens and quits are likely to fall while layoffs and discharges rise. By analyzing the actions of employers and employees in JOLTS data insights can be gained regarding the strength or weakness of the labor market and the state of the economy. JOLTS data can be accessed through their database by clicking on either “One Screen" or “Multi-Screen” and making the desired selections. This is where Utah-specific data can be selected.