The Bureau of Labor Statistics reported Tuesday that job openings fell to 6.88 million in February from an upwardly revised 7.24 million in January. Hires dropped to 4.85 million, the lowest since April 2020, and quits slipped to 2.97 million, the lowest since August of that year. The standard interpretation is that this confirms a “low-hire, low-fire” labor market in which employers and workers are frozen in place.
That gets the story backward. The JOLTS report looks less like a labor market losing steam than one settling into full employment in a country where the labor force has stopped growing rapidly.
From Super-Abundant to Ample
For most of the Biden years, the labor market was absorbing an enormous influx of new workers coming in from foreign lands. Net immigration ran at roughly three million a year, creating a labor supply so abundant that employers could hire aggressively while workers cycled rapidly from job to job. Hires ran high. Quits ran high. Churn ran high. But that abundance did not translate into better living standards for the people already here. Real average hourly earnings were negative year-over-year throughout 2022 and into the first half of 2023, falling by as much as three percent.
That era is over. Immigration enforcement has sharply reduced the flow of migrant workers, and the labor market is adjusting to the new arithmetic. The Kansas City Fed estimates that the number of jobs needed each month to keep the unemployment rate steady has fallen from around 150,000 to roughly 50,000. Brookings has suggested that number could turn negative this year.
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