The pace of hiring is slowing, but employers would rather
hang onto their workers than lay them off
Justin Lahart Follow
Aug. 29, 2023, 12:27 pm ET
The heady demand for workers that the pandemic kicked off is subsiding. But even as worries about
the economy persists, employers are in no rush to start laying people off.
The Labor Department on Tuesday reported that there were a seasonally adjusted 8.8 million unfilled
job openings on the last day of July, down from 9.2 million in June and 11.4 million a year
earlier. That is still a ton of openings: 1.5 for each person counted as unemployed, in comparison
with an average in 2019—a good year for jobs—of 1.2. But it still counts as a fresh sign that the
job market is, in fact, cooling.
The number of people quitting their jobs has fallen, too, with the Labor Department counting 3.5
million quits in July, versus 3.8 million in June and four million a year earlier. That brought the
quits rate—quits as a share of overall employment—to 2.3%. That was the lowest level since January
2021, and matched the 2019 average. The decline in quits should be especially cheering for the
Federal Reserve, since quits might actually be the better reading on job-market tightness than
openings. When people quit their job, it is usually because they have found a better one elsewhere,
often at higher pay.
One thing that hasn’t picked up much over the past year is the number of people getting fired from
their jobs. There were 1.56 million layoffs and discharges last month, which compared with 1.5
million in July last year. And thanks to the gain of about 3.4 million jobs since July last year,
the layoff rate—layoffs as a share of employment—was unchanged from a year earlier at 1%.
This is worth noting, since some high-profile layoffs, centered in the tech sector, that started
making headlines last fall sparked worries that widespread job losses were on the way. But neither
the Labor Department’s layoff figures nor weekly unemployment claims, jumped higher. And lately,
those big layoff announcements have subsided, too: Outplacement firm Challenger, Gray & Christmas
reported that its monthly count of announced layoffs came to 23,697 in July, compared with 25,810 a
year earlier.
One reason why employers might be refraining from layoffs, even as profits over the past year in
many sectors have weakened, is that they worry the people they let go might never come back. Demand
for workers is still strong—especially in areas such as healthcare and leisure and hospitality—and
that makes it easier for people who were fired to turn new leaves. If the economy avoids a
recession and keeps growing, understaffed businesses
could miss out.

For now, this counts as a positive, suggesting that the labor market can continue to cool without
getting uncomfortably cold. But if demand deteriorates in the quarters ahead, some businesses will
start letting people go, and others will be unwilling to take up the