What is the hires rate?

The hires rate is a measure from the Job Openings and Labor Turnover Survey (JOLTS) that expresses total new hires in a given month as a percentage of total employment. It captures the actual pace of hiring activity across the economy, complementing the job openings data (which measure demand) and the quits rate (which measures worker confidence). Together, these JOLTS components provide a comprehensive view of labor market dynamics.

A high hires rate indicates active churning in the labor market, with workers moving between jobs and employers successfully filling positions. During the pandemic recovery, the hires rate surged as businesses scrambled to staff up, reaching 4.5% in early 2022. This exceptionally high rate reflected both genuine labor demand and elevated turnover as workers took advantage of a hot market to job-hop for better pay. As the labor market gradually cooled through 2023 and 2024, the hires rate declined toward its pre-pandemic average of around 3.8%.

The hires rate provides information that the headline payroll number misses. Nonfarm payrolls report the net change in employment (hires minus separations), but two very different labor markets can produce the same net number. A market with 6 million hires and 5.8 million separations has the same net gain as one with 4 million hires and 3.8 million separations, but the first market has much more dynamism, opportunity, and wage competition. The hires rate captures this distinction.

For macroeconomic analysis, a declining hires rate is often an earlier warning signal than a rising unemployment rate. Firms stop hiring before they start firing; the hiring freeze precedes the layoff. When the hires rate drops below 3.5%, it historically suggests that labor market conditions are weakening enough that the unemployment rate will begin to rise within a few months. Monitoring the hires rate alongside openings, quits, and separations provides a more nuanced picture of labor market health than any single summary statistic can offer.