Demand for labor remained strong as job openings ebbed to 10.4 million in August following a record in July, which was revised upwardly to 11.1 million, according to Labor Department data released on Tuesday.
Job hires declined in back-to-back months, to 6.3 million from the recent high of 6.8 million in June, as the availability of workers continued to constrain the job market’s recovery.
To put things in context, the gap between job openings and the pool of unemployed workers in August was still elevated at more than 2 million.
The glut of openings offered workers plenty of opportunities, and they took advantage. The quit rate reached a record 2.9%, eclipsing the 2.8% rate in April that was dubbed the Great Resignation.
The labor squeeze is on for small and midsize firms
But this imbalance between labor demand and supply was unevenly absorbed across businesses of different sizes.
Bigger firms with more than 1,000 employees, which can often pay more and offer better career advancement opportunities, have largely been benefiting from such a high quit rate.
On a six-month moving average, the total number of quits from firms with more than 1,000 employees declined by 2,000 in August from July, while at the same time, firms with fewer than 1,000 employees saw their quit numbers increase by 152,000.
This divergence has been taking place since early this year, and we expect that it will continue in September. Early data released by ADP last week indicated that firms with more than 1,000 employees posted a larger gain in net employment in September compared to all other firm size groups.
That leaves small businesses struggling to retain workers as larger competitors poach their best employees.
Add on top of these challenges the shortages of goods and raw materials through disrupted supply chains, and the owners of small businesses are taking a dimmer view of the recovery. The National Federation of Independent Business optimism index declined to 99.1 in September, the lowest since March, according to data released on Tuesday.
In particular, the percentage of surveyed businesses with unfilled jobs climbed to a record 51% in September, significantly higher than the 48-year historical average of 22%.
Given the most recent data on payroll and especially on the labor participation rate—which declined by 0.1 percentage point in September—it is more than likely that labor shortages will continue to plague the job recovery rate as the demand for workers remains strong.