August Jolts Report: Thriving Jobs Market, And Still-Thriving Taboo Against Raising Wages

Tuesday’s JOLTS report once again confirmed the very good employment report from one month ago:

Quits made a new all-time high

Hires are just below their expansion high of two months ago

Total separations made a new expansion high

Layoffs and discharges improved, but not to their expansion low made in March

Job openings made yet another all-time high

Let’s update where the report might tell us we are in the cycle, remaining mindful of the fact that we only have 18 years of data. To do that, I am varying my past presentations to focus instead on hiring, quits, layoffs, and openings as a percentage of the labor force. Here’s what they look like since the inception of the series (layoffs and discharges are inverted at the 1.5% level, so that higher readings show fewer layoffs than normal, and lower readings show more:

Note the data is averaged quarterly to cut down on noise.

During the last expansion:

Hires peaked first, from December 2004 through September 2005

Quits peaked next, in September 2005

Layoffs and Discharges peaked next, from October 2005 through September 2006

Openings peaked last, in Spril 2007

By contrast during and after the last recession:

Layoffs and Discharges troughed first, from January through April 2009

Hiring troughed next, in March and June 2009

Openings troughed next, in August 2009

Quits troughed last, in August 2009 and again in February 2010

Here’s what the four metrics look like on a monthly basis for the last five years (note: Quits and Layoffs and Discharges scaled on right):

While only Quits made a new expansion high, the trend in quits and Openings has been very positive, while that of actual Hirs and Layoffs has been more mutedly so.

Next, here’s an update to the simple metric of “hiring leads firing,” (actually, “total separations”). Here’s the long term relationship since 2000, quarterly: