What to know about the Goldilocks job market

Lat month’s tally was also reduced by tens of thousands due to one-off factors like ongoing strikes in Hollywood and trucking-sector layoffs largely driven by the bankruptcy of Yellow Corp., said Aaron Terrazas, chief economist at career site Glassdoor.

Further, monthly job growth still exceeds U.S. population growth, economists said. Estimates on this “neutral” pace vary. Bunker pegs it around 70,000 to 100,000 jobs a month; Terrazas puts it around 150,000.

The pandemic-era trend known as the great resignation is over.

Workers quit their jobs at a historically high rate in 2021 and 2022, attracted by ample job opportunity and higher pay elsewhere. Quits are a proxy of workers’ willingness or ability to leave jobs. Now, quits — as well as the number of new hires made by employers — have fallen back to their pre-pandemic levels.

It’s “exactly where you’d want” these rates to be, Zandi said.

That said, some sectors have seen the quits rate decline noticeably below pre-pandemic levels, suggesting workers feel less confident about their job prospects nowadays.

For example, the quits rate for the leisure and hospitality as well as accommodation and food services sectors are each at 3.9%, “lower than 2019 levels of 4.6% and 4.9%, respectively,” Andrew Patterson, senior economist at Vanguard, wrote in an email.

There were about 8.8 million openings in July, the fewest since March 2021, according to Labor Department data. That’s more than at any point before the pandemic, though down from the Covid-era peak around 12 million in March 2022.

Job openings are “rapidly approaching” their pre-pandemic peak, suggesting “labour market conditions have mostly normalized,” Hunter wrote in a note this week.

Average three-month growth was 4.5% in August, on an annualized basis, according to a White House Council of Economic Advisers analysis of earnings data in Friday’s jobs report. While still elevated, that’s down from 4.9% last month and a peak of 6.4% in January 2022, CEA said.

There’s good news for workers, though: “Real” wages have finally flipped positive after a long stretch of declines for the average worker.

Real wages are net earnings after accounting for increases in the cost of living. On average, inflation had outstripped the growth in average hourly wages for two years, from April 2021 to April 2023, according to Labor Department data. That meant the average worker saw their living standard erode.

But a combination of falling inflation and relatively strong wage growth has meant a reversal of that trend since May — meaning living standards have begun rising again.  

In July, real average hourly earnings rose 1.1% from a year earlier, following increases of 1.3% and 0.2% in June and May, respectively, according to the Labor Department.