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The job market continued a gradual cooling in February but largely remains advantageous for workers, according to labor data issued Tuesday.
Job openings, a barometer of employer demand for workers, fell by 632,000 to 9.9 million in February — the lowest level since May 2021, according to the Bureau of Labor Statistics.
There were about 1.7 job openings per unemployed worker, the lowest ratio since November 2021. However, the number of open jobs is still significantly above its pre-pandemic level. Prior to 2021, job openings had never before reached 8 million.
“The job market is cooling,” said Daniel Zhao, lead economist at Glassdoor, a career site. “It’s just cooling from a very high temperature. It’s cooling from white hot to red hot.”
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Meanwhile, about 4 million workers quit their jobs in February. While down from the peak of over 4.5 million in November 2021, the level is about 400,000 higher than the pre-pandemic high bar.
Most people who voluntarily leave their job do so for new employment; the measure is therefore a proxy for workers’ sentiment about their labor prospects.
Layoffs also remain historically low across the broad U.S. economy despite recent headlines about job cuts in the technology sector.
Indeed, by any measure, the job market is hotter than it was in 2019 — which itself was known as a job seeker’s market characterized by factors such as low unemployment and strong wage growth, Zhao said.
Despite that historical strength, workers looking for a new job may be wise to proceed with a bit more caution, labor experts said.
‘I would tell workers not to panic quite as much’
Job openings and quits surged to record levels in early 2021 as the U.S. economy reopened, consumers unleashed pent-up demand to spend money, and businesses began a flurry of hiring.
Wage growth spiked to the highest level in decades as job seekers enjoyed ample bargaining power. Layoffs declined to record lows as employers struggled to hold on to their staff.
However, the Federal Reserve has raised interest rates aggressively to cool the U.S. economy and tame persistently high inflation.
That gradual cooling seems to be playing out in the labor market. Big technology companies, for example, have cut tens of thousands of jobs. However, those layoffs don’t seem indicative of the health of the broader economy, according to labor experts.
“I think the headlines would make workers very panicky and nervous about their job security. And I would tell workers not to panic quite as much,” said Julia Pollak, chief economist at ZipRecruiter. “Historically this is still a job seeker’s market.”
“Workers are experiencing unprecedented job security — and not just job security, but choice,” Pollak added.
That said, job seekers are likely still feeling a slowdown even if the labor market is strong, Zhao said.
For example, a worker today might not have as many job offers, may get a smaller pay bump when switching jobs, or might find the job search takes a bit longer relative to the dynamic in 2021.
It’s also unclear how the recent turmoil in the banking sector may affect the labor market and economy.
“It’s a good reminder that people can still find a better job in today’s job market,” he said of the labor data issued Tuesday. “But it’s important to do your research as a job seeker. I think it’s healthy to consider whether the business or industry you’re interested in is going to be healthy moving forward, and whether that company is really a great fit.”
