Fewer Americans quit their jobs in October, Labor Department data indicated Wednesday, but even a modest uptick in hiring didn't put much of a dent into the near-record high rate of unfilled positions as companies find themselves paying increasingly higher wages to lure people back into the workforce.
The Job Openings and Labor Turnover Summary, published each month by the Bureau of Labor Statistics, showed just over 11 million unfilled positions in the month of October, the second-highest tally on record and 431,000 higher than the final September tally.
Monthly hires were pegged at 6.5 million, the report noted, while the so-called 'quits rate' fell by 2.8%, or 205,000, to 4.2 million.
Still, the fact that so many jobs remained unfilled, while more than 4 million Americans appear to have left the workforce, continues to puzzle economics and corporate bosses alike.
“An overlooked reason for this trend is that some people might have left their jobs to start their own business. According to the Business Formation Statistics, there has been a large increase in the number of applications being filed since the start of the pandemic.” said Rucha Vankudre, senior labor economist at Emsi Burning Glass. “This could be a possible explanation for why so many workers are quitting their jobs.”
That might explain the disappointing headline figure in Friday's November employment report, which showed only 210,000 new positions added, the lowest total of the year, even as the headline unemployment rate fell to a post-pandemic low of 4.2%. Average hourly earnings, meanwhile, rose 4.8% from last year to just over $31.00.
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Others suggest issues such as childcare, concerns linked to Covid infections, the added financial support from prior government stimulus and jobseekers holding out for higher wages are all factoring into the the labor market mix.
“Our data has tracked the clear shift in bargaining power from employers to workers over the past year,” said Burning Glass economist Bledi Taska. “To compete in this environment, companies are taking proactive steps that have become increasingly visible in their job ads—from signaling the enhanced pay and benefits on offer, to casting a wider net for prospective hires, whether in terms of credentials, experience, or geography.”
That said, recent developments at Kellogg Co. (K) - Get Kellogg Company Report suggest companies are attempting to tame that power leveraging -- paradoxically -- the vast number of workers sitting on the sidelines.
In a move reminiscent to Ronald Regan's firing of striking air-traffic controllers in the early 1980s, the cereal maker is planning to permanently replace some of the 1,400 unionized workers that rejected a five-year labor contract yesterday.
Kellogg said replacement workers were already in pace at plants in Tennessee, Nebraska, Michigan and Pennsylvania, where workers have been on strike over wages and benefits, as well as a tiering system for new hires, since October 5.
Kellogg said the rejection of six different contract offers has left it no choice but to look for permanent replacements, and has no plans to meet with union leaders going forward.