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What does the JOLTS report tell us about labor market health?

The Job Openings and Labor Turnover Survey (JOLTS), released monthly by the Bureau of Labor Statistics, offers a window into labor market dynamics that the non-farm payroll report cannot. While non-farm payrolls tell you how many jobs were created or lost, JOLTS tells you how many jobs are available and how many workers are quitting their jobs to find something better. For investors and policymakers, JOLTS data can signal whether the labor market is genuinely tight or whether weakness is building beneath a calm surface.

JOLTS matters because it reveals supply-and-demand imbalances in the labor market. When job openings far exceed available workers (a high "openings-to-unemployment ratio"), businesses must bid up wages to attract talent. Higher wages can feed inflation. When openings fall and quit rates rise, it suggests workers are leaving jobs in search of better opportunities — a sign of confidence and tight labor markets. When openings plummet and quit rates fall, recession risk rises because businesses are shedding opportunities and workers are clinging to existing jobs. Understanding JOLTS is understanding the labor market's true state.

Quick definition: JOLTS is a monthly survey of about 23,000 businesses that measures job openings, hires, quits, and other labor turnover metrics. It reveals whether labor markets are tight (many openings, few workers) or slack (few openings, discouraged workers).

Key takeaways​

  • JOLTS measures job openings, quits, hires, layoffs, and other labor turnover in real time.
  • The openings-to-unemployment ratio is a key indicator of labor market tightness; when it exceeds 1:1, wage pressures typically accelerate.
  • High quit rates signal worker confidence and competitive labor markets; low quit rates suggest economic weakness or fear.
  • JOLTS data arrives with a one-month lag (current month's report released mid-following month) but is highly responsive to economic shocks.
  • The Fed uses JOLTS to calibrate monetary policy; tight labor markets (many openings) are a reason to hold rates high or continue hiking.

How JOLTS is measured and released​

JOLTS is a monthly survey conducted by the BLS in partnership with state employment agencies. The BLS surveys roughly 23,000 nonfarm establishments — a sample stratified by industry and size. Each establishment reports:

  • Job openings: the total number of positions the business is actively trying to fill at the end of the month.
  • Hires: the total number of employees added during the month.
  • Quits: the total number of employees who left voluntarily.
  • Layoffs and discharges: involuntary separations.
  • Total separations: sum of quits, layoffs, discharges, and other exits.

Unlike non-farm payrolls (released on the first Friday of the month), JOLTS arrives with a one-month lag. The report for May is released in the second or third week of July. This delay reflects the complexity of collecting and processing job-opening data from a diverse sample of businesses. Despite the lag, JOLTS is released with much less fanfare than the payroll report, even though it offers crucial insights.

The sample of 23,000 businesses is representative of the economy but much smaller than the 130,000 businesses surveyed for non-farm payrolls. This means JOLTS data is noisier and subject to larger sampling error. To combat this, the BLS seasonally adjusts the data and publishes a rolling three-month average for some metrics. Analysts typically smooth JOLTS numbers to identify trends rather than obsessing over month-to-month swings.

Job openings: The supply-demand imbalance story​

The job-openings component of JOLTS is perhaps the most economically significant. It tells you how many unfilled positions businesses have — that is, positions they want to fill right now. In a normal, balanced labor market, the number of job openings roughly equals the number of unemployed workers. Both sides have options. Wages are stable.

When job openings exceed the number of unemployed workers — the "openings-to-unemployment ratio" rises above 1.0 — the market becomes unbalanced. Businesses have more jobs than there are workers to fill them. They compete for talent by raising wages. Workers can be choosy, job-hopping to find better pay and conditions. Inflation risk rises because wage pressures feed through to prices.

The period from 2021 to mid-2022 exemplified a severely unbalanced labor market. Job openings peaked at over 11.9 million in July 2022, while unemployment hovered near 3.5%. The openings-to-unemployment ratio reached nearly 2:1 — for every unemployed worker, there were two job openings. This was historically extreme. Businesses were desperate to hire; wages surged at 5%+ annual rates. The Fed, recognizing the imbalance, pivoted to aggressive rate hikes.

As the Fed's tightening took hold through 2022 and 2023, job openings gradually fell. By early 2024, openings had declined to around 8.5 million, and unemployment had ticked up to 4.0%. The ratio had normalized to closer to 1.2:1 — still tight by historical standards, but far less extreme than the 2021–2022 peak. Wage growth moderated correspondingly, from 5%+ to around 4%. This normalization gave the Fed confidence that monetary policy was working and that inflation would continue to cool.

The relationship between the openings-to-unemployment ratio and wage growth is one of the most reliable labor market linkages. When the ratio falls below 0.8 (more unemployed than openings), wage growth typically slows sharply and recession risk rises. When the ratio climbs above 1.2, wage growth accelerates and inflation risk rises. This metric is thus a crucial input to Fed policy decisions, even though JOLTS attracts far less media attention than the non-farm payroll report.

Quit rates: A window into worker confidence​

The quit rate — the share of employed workers who quit their jobs voluntarily each month — is a barometer of labor market health and worker confidence. Workers quit when they are optimistic: they believe they can find a better job, higher pay, or better working conditions elsewhere. In recessions, quit rates plummet as workers cling to their existing jobs, fearful that new opportunities are scarce.

The quit rate is calculated as: (quits) / (total employment). The BLS publishes this as a monthly rate. In healthy times, the quit rate hovers around 2.0–2.2% per month, implying that roughly one in 45–50 employed workers quits each month. Over a year, this implies an annual quit rate around 24–26%, suggesting significant labor force churning.

During the pandemic recovery of 2021, quit rates spiked to over 3% per month — an extraordinarily high level not seen in decades. This reflected the sharp reopening of the economy, workers' newly found options (many businesses scrambled to hire), and what economists called "the Great Resignation" — a wave of voluntary departures as workers reassessed their priorities post-pandemic. Some quit to take remote jobs; others left to return to school or care for family. This surge in quits was a key reason wage growth accelerated so sharply.

As the Fed tightened policy through 2023 and job creation slowed, quit rates gradually declined. By late 2023 and early 2024, quit rates had settled back to around 2.1–2.3% per month — roughly normal. This moderation, combined with falling job openings, suggested that the labor market was cooling without a sharp shock. Workers were no longer fleeing in droves; they were settling into their jobs, suggesting they felt less urgently compelled to search.

A sharp decline in quit rates can also signal the early phase of a recession. Workers sense weakness before official recession data arrives and start holding onto their jobs. In late 2007 and early 2008, before the financial crisis was widely acknowledged, quit rates began falling. This was one of the earliest recessionary signals. The reverse also holds: rising quit rates at the onset of recovery suggest confidence returning to the labor market.

Hires and separations: The churn beneath the surface​

JOLTS also tracks total hires and total separations — the gross flows of workers into and out of employment. These numbers are much larger than net employment changes because they capture churn. In any given month, millions of workers are hired (some new to the labor force, others moving between jobs) and millions separate (some by quits, others by layoffs or retirement).

For example, in a month when the non-farm payroll report shows 200,000 net job creation, JOLTS might show 6 million hires and 5.8 million separations. The 200,000 figure is the net; the 12 million total flows reveal the underlying dynamism. High churn often signals a flexible, dynamic labor market where workers move between jobs easily. Low churn can signal either stability or rigidity, depending on whether separation rates are low because few are leaving (stability and confidence) or because few are being hired (weakness and fear).

Layoffs and discharges (involuntary separations) are particularly important to track. In good times, layoffs are low — businesses are not shedding workers because demand is strong. In recessions or downturns, layoffs spike as businesses restructure and reduce headcount. A spike in the layoff rate is one of the earliest recession warning signs. It often precedes the non-farm payroll report showing negative job creation because layoffs are immediate and visible, while the aggregate payroll effect takes time to show up.

During the 2008 financial crisis, layoff rates spiked from around 0.5% per month to over 1.0%, then peaked near 1.5% in 2009. This surge in involuntary separations preceded the nadir of the payroll decline. Similarly, in the pandemic panic of March–April 2020, layoffs spiked briefly to 0.6%+ as businesses immediately shed workers; quits also fell as workers clung to their jobs. The recovery saw layoffs normalize while quits surged, confirming the opposite dynamic.

JOLTS and the Fed's understanding of labor market slack​

The Federal Reserve cares deeply about labor market slack — the amount of underutilized labor in the economy. Slack comes in various forms: unemployment, underemployment (part-time workers who want full-time jobs), discouraged workers who've dropped out of the labor force, and long-term unemployment. JOLTS doesn't measure all of these directly, but it provides a real-time signal of labor market tension that Fed models use.

When JOLTS shows many job openings and few quits, the Fed interprets this as "limited slack" — the economy is running hot, with little room to run without inflation accelerating. When JOLTS shows few openings and high quits or layoffs, the Fed sees slack building — workers are struggling to find good positions. The Fed targets the "natural rate of unemployment" — the long-run equilibrium unemployment rate consistent with stable inflation, often estimated around 4.0–4.5%. When unemployment falls significantly below this rate and job openings are abundant, the Fed sees reason to raise rates.

JOLTS thus shapes the Fed's inflation narrative. In 2021, when job openings soared and quit rates spiked, the Fed took this as evidence that labor markets were extremely tight, limiting slack and putting upward pressure on inflation. By contrast, in late 2023, when job openings had fallen and quit rates had moderated, the Fed was more comfortable with the notion that slack was returning and inflation could cool further without unemployment rising sharply.

The Fed also uses JOLTS to calibrate the "neutral rate" of interest — the rate at which monetary policy neither stimulates nor restrains the economy. A tight labor market with abundant job openings suggests the neutral rate is higher than previously thought, justifying higher-for-longer interest rates. A loosening labor market with declining openings and quits suggests the neutral rate may be lower.

Real-world examples: JOLTS over economic cycles​

The 2008–2009 financial crisis: Job openings collapsed from over 3 million pre-crisis to under 2 million by 2009. Quit rates plummeted from nearly 2.2% to 1.3%, as workers clung to their jobs in fear. Layoff rates spiked to 1.5%, indicating waves of involuntary separations. The labor market was completely unbalanced: millions of workers competed for far too few openings. Recovery was slow; it took until 2013–2014 for openings to rise back to pre-crisis levels.

The 2020 pandemic shock and recovery: JOLTS first showed the shock: job openings fell from 7.5 million in February 2020 to 4.6 million in April. Quit rates dropped from 2.2% to 1.6% as workers feared the crisis. But the rebound was swift and unusual. By mid-2021, job openings had surged past 9 million — well above pre-pandemic levels. Quit rates rose to 3%+, the highest on record. This imbalance — the combination of soaring openings and surging quits — was a key reason wage growth accelerated and the Fed shifted to tightening in 2022.

The 2022–2023 tightening: As the Fed raised rates through 2022 and into 2023, job openings fell from the July 2022 peak of 11.9 million to around 8.5 million by early 2024. Quit rates fell from the 3%+ pandemic levels back to 2.1–2.3%. This normalization was gradual and without a sharp shock, suggesting a "soft landing" — the textbook goal of Fed policy to cool inflation without triggering recession.

Early 2024 dynamics: By March 2024, JOLTS data showed job openings at 8.5 million, unemployment around 4.0%, and the openings-to-unemployment ratio at approximately 1.1:1. Quit rates were running around 2.1% per month. This configuration suggested a labor market that was cooling but stable — not weakening rapidly enough to trigger recession fears, but cooling enough that wage pressures were easing and the Fed could eventually cut rates.

How JOLTS differs from other labor market measures​

JOLTS is often confused with or conflated with other labor market metrics. Understanding the distinctions is crucial.

JOLTS vs. non-farm payrolls: Non-farm payrolls measure the net change in employment (hires minus separations). JOLTS measures gross flows (hires, quits, layoffs separately). JOLTS thus provides detail on composition — whether employment growth is from new hires or declining quits, and whether separation is voluntary or involuntary. The two data sources can tell different stories. For example, a month showing payroll growth with low hires but even lower quits might look strong on payrolls but weak on JOLTS, suggesting a stalling hiring process.

JOLTS vs. unemployment rate: The unemployment rate (from the household survey) measures the share of the labor force that is jobless and actively job-seeking. JOLTS measures job availability and worker flows. The two can diverge. Rising unemployment with rising job openings (as happened briefly in 2023) suggests workers are temporarily between jobs or recently entered the labor force; the mismatch is frictional, not structural. Falling unemployment with falling job openings suggests workers are leaving the labor force; this can mask labor market weakness.

JOLTS vs. help-wanted ads (indeed.com, LinkedIn): Private job-posting sites like Indeed and LinkedIn track advertised job openings in real time. JOLTS is official government data with a one-month lag. Private sites are faster and can respond to immediate shifts; JOLTS is slower but more comprehensive and standardized. During the pandemic, Indeed's help-wanted index captured the shock and recovery faster than JOLTS. But both tell broadly similar stories over longer horizons.

Limitations of JOLTS data​

JOLTS, while rich, has limitations. The survey covers only 23,000 businesses, far fewer than the 130,000 surveyed for non-farm payrolls. This means JOLTS data is noisier and subject to larger sampling error. Month-to-month swings in JOLTS can reflect survey noise as much as true economic changes.

JOLTS also measures job openings only as of the last business day of the month. A position filled on the 29th but posted on the 1st shows up in one month's data but not the next. This timing quirk can create false swings. Similarly, businesses sometimes post duplicate or outdated job openings, inflating the true number of available positions.

The definition of a "job opening" is broad — a business merely needs to be actively recruiting for a position, even if no formal job posting exists. This means JOLTS can overstate true demand in tight periods (when businesses post openings speculatively) and understate it in weak periods (when businesses stop advertising, even if hiring slows gradually).

Finally, JOLTS does not capture informal hiring, gig work, or self-employment. Like non-farm payrolls, it focuses on traditional payroll employment. The growing gig economy means JOLTS misses an increasingly important chunk of labor market activity.

A diagram of the labor market flows captured by JOLTS​

Common mistakes interpreting JOLTS​

Mistake 1: Ignoring the one-month lag. JOLTS arrives six to eight weeks after the month it measures. By the time you see March data in late May, market conditions may have shifted. Always check whether more recent non-payroll data contradicts the JOLTS story.

Mistake 2: Over-weighting month-to-month changes in openings or quits. JOLTS is noisy; a 500,000-job-opening swing one month can reverse the next. Use three-month averages to identify true trends.

Mistake 3: Treating job openings as net job creation. Just because 8 million jobs are open does not mean 8 million jobs will be filled or created. Many openings remain unfilled for months or are filled by workers leaving other jobs (net-zero effect on total employment).

Mistake 4: Assuming all job openings are good jobs. JOLTS counts all openings equally, whether they are high-wage professional roles or low-wage part-time positions. A surge in low-wage openings looks like growth on JOLTS but may not translate to meaningful income gains.

Mistake 5: Missing the lag between JOLTS and policy response. The Fed sees JOLTS data with a lag and incorporates it into decisions gradually. A surge in quits in, say, March (reported in late May) might not influence Fed communications until June or July.

FAQ​

How often is JOLTS released?​

JOLTS is released once per month, with a one-month lag. The current-month report is released in the second or third week of the following month.

Where can I find the official JOLTS report?​

The BLS publishes JOLTS at https://www.bls.gov/jlt/. The report includes detailed tables, a summary, and downloadable data.

What is the relationship between the quit rate and inflation?​

A high quit rate signals tight labor markets and worker confidence, which typically leads to wage pressure and inflation risk. The Fed watches quit rates to gauge wage-growth risks. A declining quit rate suggests cooling labor markets and lower wage-pressure risk.

Can job openings exist without being filled?​

Yes. Some positions remain open for months if employers are unwilling to raise pay, if skills are scarce, or if the position is undesirable. In 2022–2023, millions of openings persisted even as hiring slowed, suggesting mismatches between available workers and desired qualifications or pay.

How does JOLTS relate to recession prediction?​

Rising layoff rates are a recession warning signal. JOLTS also shows early signs of recession through declining job openings, falling hires, and falling quit rates. These typically precede non-payroll job losses by one to three months.

Is there a difference between "job openings" and "job creation"?​

Yes. Job openings are positions businesses want to fill. Job creation (net from non-farm payrolls) is the actual net increase in employment. Openings can grow without job creation if quits offset new hires.

How accurate is JOLTS?​

JOLTS is subject to sampling error due to its smaller sample size (23,000 vs. 130,000 for payrolls). The BLS publishes confidence intervals. For trend analysis, it is reliable; for month-to-month interpretation, caution is warranted.

Summary​

The JOLTS report reveals job openings, quits, and labor turnover — dynamics the non-farm payroll report cannot capture. The openings-to-unemployment ratio is a key indicator of labor market tightness and wage-pressure risk. Rising quit rates signal worker confidence; falling quit rates signal fear. Rising layoff rates are an early recession warning. By tracking job openings relative to unemployment and monitoring quit rates, investors and policymakers can diagnose whether labor markets are genuinely tight (risking inflation) or loosening (reducing inflation risk). JOLTS arrives with a one-month lag and is noisier than payroll data, but for those who study it carefully, it provides a crucial window into the economy's most forward-looking indicator: the labor market's health.

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