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Labor Turnover and Retention

Job Vacancies and Workforce Churn

As part of its Job Openings and Labor Turnover Survey (JOLTS), the Bureau of Labor Statistics (BLS) publishes data that shed additional light on U.S. job market trends. The widely referenced job openings rate, which represents unmet demand for labor, is designed to complement the unemployment rate, which represents excess labor supply. The job openings rate is defined as total job openings divided by total employment and tends to rise in periods of sustained economic expansion. The following chart illustrates that the job openings rate, at 2.6 percent in March, has returned to levels last seen in 2005.

Another key metric is the turnover rate, defined as total separations (quits, layoffs and discharges, and other separations) divided by total employment. Intuitively, separations would seem to be countercyclical; as economic conditions deteriorate, employers lay off workers. However, because of the dominance of quits among the three components of total separations, separations have behaved procyclically (BLS, 2004). Voluntary quits tend to increase when the labor market improves because workers have more job opportunities to choose from. As the chart below demonstrates, the turnover rate stood at 3.2 percent in March, suggesting churn in the U.S. job market has slowed.