Job openings returned to a record-high 11 million in the JOLTS report released today, driving the current ratio of unemployed people to job openings down to 0.62, the lowest on record. The share of workers quitting their jobs each month also remains high at 2.8% or 4.2 million workers.
Over the past year, job openings and resignations have risen across the economy. But it is small and medium-sized businesses that have seen the most dramatic increases in labor market churn.
Small- and medium-sized companies are generating 90% of the job openings and new hires in the economy
Small- and medium-sized businesses are fueling the record-high job openings in the US economy. As of October 2021, establishments with less than 1,000 employees account for 90% of all job openings, with 9.15 million vacancies to fill. They are also responsible for 94% of the new hires made in October 2021. The hires rate for small- to medium-sized companies vary between 3.9% to 5.3%, whereas it is only 1.9% for employers with more than 5,000 employees.
The Great Resignation has not hit enterprises
Today’s data show that the Great Resignation wave may finally be hitting major enterprises. Until recently, the quits rate for the largest companies with more than 5,000 employees had been relatively stable and consistent with historical trends. The dramatic rise in resignations had been a small- and medium-sized business phenomenon only.
Today’s report suggests that the largest firms can no longer be complacent. Their quit rate rose rapidly from 1.1% to 1.6%. That is still well below the 3.5% rate for mid-sized companies, but the upward trend should put large companies on notice.
Major enterprises will need to preserve their advantage in the current labor market
Major enterprise companies have reported recruitment and retention challenges since the Covid recovery began, but they have been able to react so quickly and aggressively that their challenges hardly showed up in the data. Until now. Rising quits could put pressure on them to lean into their three major advantages even more heavily:
- Offering higher wages: Companies such as Costco and Amazon have boosted starting pay to $17 and $18 per hour, respectively, to attract talent and reduce turnover. Walgreens recently hit $15. CVS is set to follow in July, 2022. Starbucks is pledging two pay increases in 2022 which will bring starting pay to $15 per hour most of the year and $17 per hour in the summer. Many other major companies are following suit.
- Offering better benefits and greater flexibility: Large companies have made substantial investments in employee training and career development over the past year. Many have also started offering more flexible schedules and remote work arrangements, as well as better benefits packages. For example, Macy’s will now pay for employee’s college tuition. Amazon, Walmart, and Starbucks are providing great schedule flexibility.
- Data-driven human resources decision-making: Corporate giants also have an advantage when it comes to receiving market signals and detecting changing conditions quickly. Since they hire so frequently, they get more feedback from the market. In addition, many have made substantial investments in human resources analytics tools, which help leaders to identify retention risks and address issues promptly.
There is evidence that small businesses are increasingly adopting best practices and improving changes to working conditions to stay competitive. They are beginning to see retention improvements. Enterprises have signaled, however, that they will continue to do what it takes to hold onto their existing employees and attract new applicants. 2022 could see companies take even bolder steps to win the war for talent.