The number of job openings in the U.S. remained near record-high levels in September, according to the Bureau of Labor Statistics, but even though demand for workers is nearly as strong as ever, quit rates jumped to a new high, and analysts at Goldman Sachs believe it will take longer than previously expected for labor force participation to recover from the pandemic.
There were 10.4 million open jobs at the end of September, roughly flat from a month prior and inching closer to a record-setting 10.9 million at the end of July, according to the Labor Department’s job openings and labor turnover report released Friday.
The number of people quitting their jobs in September increased to a high of 4.4 million, with the largest increases in arts and entertainment (up 56,000) and schools (up 30,000), while the number of layoffs and terminations was little changed at 1.4 million.
Though jobs are “abundant,” analysts at Goldman Sachs on Thursday lowered their projections for labor force participation to just 61.9% by the end of the year and 62.1% at the end of next year—meaning the number of people working or looking for work should remain at 45-year lows.
Led by Goldman’s Jan Hatzius, the analysts noted most of the 5 million people who have exited the labor force since the start of the pandemic are over the age of 55 and likely won’t ever return to work, due largely to early and natural retirements of about 1.5 million and 1 million, respectively.
Though childcare constraints and health-risk concerns have improved with school reopenings and vaccinations, respectively, Goldman notes about 1.6 million Americans are still reporting concerns about the spread of Covid-19 as their main reason for not working.
Lastly, the analysts point to “generous” government support programs as another factor discouraging labor supply, but they expect these effects should fade after the end of this year, when the expanded child tax credit of $300 per month is set to expire.
The delta variant-spurred wave of Covid-19 infections this year proved troubling for the already-battered labor market, which is still down about 4 million workers compared to prepandemic levels. The struggles culminated with the job market’s worst month of the year in September, when the economy added back just 200,000 jobs, starkly low compared to expectations of a million additions. But as cases declined in recent weeks, new jobless claims posted a streak of weekly improvements, and the U.S. added back a better-than-expected 531,000 jobs in October—marking the long-struggling labor market’s best monthly showing since July. “The labor market is not back to pre-Covid-19 levels, but it has staged an impressive comeback over the past 18 months,” Jay Pestrichelli, the CEO of Florida-based investment firm Zega Financial said in an email last week, noting the pace of hiring rebounded last month as Covid-19 cases declined and restrictions eased.
"For many employers, the struggle continues," Mark Hamrick, a senior economic analyst at Bankrate, said in a Friday note. “As a result of many changes caused by the pandemic, many employers will need to continue to consider raising wages and improving working conditions, such as providing more flexibility, as they attempt to attract and retain workers.”
Job openings in September were highest in industries such as healthcare (up 141,000), state and local government (up 114,000) and wholesale trade (up 51,000).