America’s job market is turning into an exclusive airport lounge

By Alicia Wallace, CNN

(CNN) — In a K-shaped economy where the “have-nots” are increasingly falling behind the “haves,” the labor market is trending toward a similar fate.

Job opportunities didn’t shrink as feared in October as holiday staffing needs lifted openings to a five-month high, new shutdown-delayed data showed Tuesday. However, the latest official look at employment trends showed that there’s still a deep chill running down the spine of the US economy.

Hiring continued to stall, layoff activity picked up, and employees clung to their jobs with white knuckles: The voluntary quits rate (a closely watched indicator of worker confidence) fell to a five-year low, according to the latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics.

“The labor market is becoming a much more exclusive club,” said Noah Yosif, chief economist at the American Staffing Association, told CNN in an interview Tuesday. “Those on the inside, they’re doing pretty well; but for those on the outside, it’s getting harder and harder to break in.”

“And if that is to continue in the long term, the inability for those folks on the outside to hold down a steady paycheck could cause more severe ramifications for the economy,” he added.

The all-important churn is slowing

Tuesday’s report, which includes September and October JOLTS data, is the latest in a long pipeline of federal economic reports that were delayed and disrupted by the historic federal shutdown’s negative effect on statistical agencies’ abilities to collect, process, analyze and disseminate crucial data.

It’s the first labor market release for October from the BLS and the most up-to-date official look at the job market for Federal Reserve policymakers, who are currently meeting to consider their next move on rates. (A policy announcement is due at 2 p.m. ET on Wednesday.)

The BLS’ JOLTS report is a closely watched indicator of labor turnover, providing the trajectory of how much businesses say they’re looking to hire (openings); how much they’re actually adding to their workforce (hires); to what extent they’re cutting back on their workforce (layoffs); and to what extent people are voluntarily leaving their jobs (quits).

That churn is needed for a healthy labor market (and healthy economy).

“The labor market depends on dynamism,” Yosif said. “The dynamism of the labor market is really what determines whether not only employers are able to find the best candidates for their work, but also what determines whether employees are able to find the best opportunities for them and, of course, earn a steady paycheck to contribute to the economy.”

However, for much of this year, the US labor market has lost its momentum. And despite the elevated tally of estimated job openings seen Tuesday, that trend held true in September and October.

‘No holiday cheer for job seekers’

When the August JOLTS report was released on the eve of what would become the longest-ever shutdown, job openings as a share of total employment remained at a five-year low.

There was a solid rebound in September, Tuesday’s data showed, as the number of available jobs picked up from 7.23 million in August to 7.66 million. In October, they ticked higher to 7.67 million.

However, the elevated level of openings appeared to be largely driven by businesses gearing up for the holiday shopping season: Trade industries (wholesale, retail and transportation) saw the biggest jumps in job postings in October, JOLTS data showed.

The hiring outlook was even more dour: Very few industries added jobs. Aside from a bump among some services firms, hiring was flat if not down across most sectors.

“Where employers really put their money where their mouth is, is when it comes to hiring,” Yosif said. “And unfortunately, we haven’t really seen much of an uptick in hiring.”

The estimated level of hires as well as the rate of hiring (as a percentage of total employment) picked up in September from August; however, they both dropped off again in October. The hires rate returned to one of its lowest points seen in more than a decade, BLS data shows.

To anyone on the outside looking in, that’s unwelcome news.

“There’s no holiday cheer for job seekers,” Heather Long, chief economist at Navy Federal Credit Union, wrote Tuesday. “While it’s encouraging job openings ticked up in October, it’s hard to get too excited until firms start hiring people.”

Layoffs increased in September as well as October, landing at the highest level since January 2023. However, the rate of layoffs is about where it was heading into the pandemic.

As job market grows stagnant, opportunities dwindle

In this low-hire, low-fire labor market environment where it’s taking jobseekers an average of six months to find work, those who have employment are holding on to what they have, Tuesday’s report showed.

Quits fell to their lowest levels since May 2020, when the pandemic rocked the economy.

For now, the US economy can withstand the dwindling momentum in the jobs market, Yosif said, noting a shift in the “breakeven rate” of employment. Put simply, the economy doesn’t need to create as many jobs as it once did to sustain itself.

“Back in 2023, the breakeven rate for the economy was about 250,000 jobs every month, but now that’s dropped to about [30,000] to 40,000 jobs per month,” he said, noting that the year-to-date job gains well outpace that breakeven point.

However, he cautioned, the bigger question starts to become, “Who is having access to these opportunities.”

“The stagnant labor market is really having a disproportionate impact on the young and financially vulnerable workers,” he said. “The economy can definitely withstand this lack of momentum for a good amount of time, but it’s the people who are really getting crushed by the stagnant labor market whose effects are going to be felt more acutely.”

A clearer snapshot of employment activity will be available the morning of December 16 when the BLS releases the November jobs report. The shutdown-delayed release also will include partial data for October (payroll estimates but not survey-drawn data such as the unemployment rate or demographic data).

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