The Job Openings and Labor Turnover Survey, widely known as JOLTS, is a significant monthly economic indicator that provides a detailed look at the health and underlying dynamics of the United States labor market. Released by the Bureau of Labor Statistics (BLS), the report offers deep insights into the supply and demand for labor, moving beyond simple net employment figures to show the movement of workers. Understanding JOLTS is particularly helpful for tracking granular shifts in worker confidence and employer need across various economic sectors.
Defining the JOLTS Report
The JOLTS report is compiled from a monthly survey sent to approximately 21,000 nonfarm business establishments across all 50 states and various industries. Unlike the monthly employment report, which focuses on static figures like the unemployment rate, JOLTS captures the continuous flow and churn of the labor market by tracking the movement of workers into and out of jobs.
JOLTS measures labor demand by collecting data on the number of available jobs. It also measures labor movement by recording how many people are hired or leave their positions each month. This provides a deeper view of economic activity than simple payroll counts, helping analysts gauge the velocity of employment change.
The Three Key Components of JOLTS
The JOLTS report is built upon three primary metrics that track the movement of jobs and workers across the economy.
Job Openings
Job openings represent all positions that are vacant on the last business day of the month. To be counted, the position must be available for immediate filling, and the employer must be actively recruiting for it (e.g., advertising, accepting applications, or interviewing candidates). This figure is a direct measure of unmet labor demand, indicating how many jobs companies want to fill but have not yet succeeded in staffing.
Hires
The hires figure counts the total number of additions to a company’s payroll during the calendar month. This includes new employees, people returning from layoffs lasting longer than seven days, and transfers from other establishments within the same company following a separation. A high number of hires demonstrates that employers are successfully finding and bringing on new staff to meet their operational needs.
Separations
Separations represent the total number of employees who left their positions during the month. This category is subdivided into three distinct types to distinguish between voluntary and involuntary departures. The quits rate tracks voluntary departures initiated by the employee. The layoffs and discharges figure covers involuntary separations, such as firings or company-wide reductions in force. Finally, the other separations category includes departures due to retirement, death, disability, or military duty.
Why JOLTS Matters to the Economy
The data within the JOLTS report helps in understanding and predicting macroeconomic trends. Policymakers, particularly the Federal Reserve (Fed), closely monitor JOLTS figures when assessing the economy and formulating monetary policy. When job openings significantly outnumber unemployed workers, it signals a tight labor market. This tightness forces employers to compete for workers, often by offering higher wages. This competition can contribute to upward pressure on inflation, directly influencing the Fed’s interest rate decisions.
The separations data also serves as a leading indicator for potential shifts in the business cycle. A sustained increase in layoffs and discharges can signal that businesses anticipate an economic slowdown or recession, often before other data confirms the trend. Conversely, a prolonged period of high job openings suggests robust business confidence and an appetite for expansion. Analysts use these employment figures to anticipate broader shifts in consumer spending and investment.
Interpreting JOLTS Data
Analyzing the relationships between the JOLTS components provides insight into labor market dynamics. One telling metric is the ratio of job openings to unemployed workers, which quantifies market tightness. When this ratio is high (e.g., 1.5 openings for every unemployed person), it indicates a strong seller’s market where workers have greater bargaining power and choice. A low ratio signals a weaker job market with more competition among job seekers for fewer opportunities.
The quits rate is a key measure of worker confidence and economic optimism. A high quits rate means employees are voluntarily leaving their current jobs, confident they can quickly secure better employment elsewhere, often with higher pay or improved conditions. This voluntary turnover forces employers to invest more in retention efforts. Conversely, a declining quits rate suggests workers are choosing to stay put due to perceived scarcity of alternatives. Comparing hires against total separations reveals the pace of net employment growth; significantly more hires than separations signals a rapidly expanding workforce.
JOLTS and Current Labor Market Dynamics
The JOLTS framework helps explain recent labor market phenomena. For instance, the “Great Resignation” was characterized by historically high quits rates reported in JOLTS data. This high rate indicated a mass, voluntary movement of workers seeking improved compensation and work arrangements, driven by confidence in finding new employment. Persistent labor shortages reported by companies are reflected in a sustained, high job openings rate, showing an imbalance between available jobs and willing workers.
These dynamics illustrate a shift in power from employers to employees in certain sectors. When the ratio of openings to unemployed individuals remains elevated, companies must focus on retention and recruitment strategies beyond simple wages and benefits. Workers should pay attention to the quits rate in their industry because a rising number suggests others are successfully finding better opportunities, confirming the strength of the labor market and signaling increased bargaining power.