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Labor Turnover and Employment in Different U.S. Regions

The Bureau of Labor Statistics (BLS) provides labor turnover and vacancy data for four broad census regions (the >Midwest, Northeast, South, and West) and the entire nation as part of its Job Openings and Labor Turnover Survey (JOLTS). According to these data, which begin in December 2000, there is significant variation in the way labor turnover behaves in the different regions. In the Northeast, for instance, employers hired an average of 745,000 workers a month, while in the South it was more than 1.7 million. Similarly, the South has accounted for most of the job openings and separations over the past eight years, whereas the Northeast lagged behind other regions.

Job Openings and Turnover, Regional Monthly Averages (thousands)

Midwest Northeast South West U.S.
Hires 1,020 745 1,753 1,047 4,565
Separations 990 718 1,669 1,016 4,392
Job openings 731 617 1,362 821 3,530
Net hires 30 28 85 30 173
Note: The averages represent monthly JOLTS data since December 2000, when the series began.
Source: Bureau of Labor Statistics.

These figures should not be surprising given the South's greater employment numbers: Since 2001, average total employment in the South has accounted for about 35.5 percent of U.S. nonfarm payroll employment, compared to 23.6 percent for the Midwest, 21.9 percent for the West, and 19 percent for the Northeast. But the curious behavior emerges when we look at each region's shareof various categories of labor turnover. The contribution of the South is greater than its employment share in virtually every category. Its share of hires, separations, and job openings are all about 38 percent of the U.S. total. The West shows a similar pattern, although much less pronounced. The Northeast, on the other hand, seems to have contributed less than its employment share in all measures of labor turnover and job openings. The Midwest presents a balanced picture in terms of hires and separations. Its share of job openings, however, has been lagging significantly behind its employment share. As a result, the South's employment share has grown over this period (from 35 percent to 36 percent), more rapidly than the West (from 21.5 percent to 22.2 percent), whereas that of Northeast and Midwest have been shrinking somewhat (from 19.2 percent to 18.5 percent and from 24 percent to 23 percent, respectively).

Job Openings and Turnover, Regional Shares of U.S. Total

Midwest Northeast South West U.S.
Hires .223 .163 .384 .229 1.00
Separations .225 .163 .380 .231 1.00
Job openings .207 .175 .386 .232 1.00
Net hires .175 .161 .489 .176 1.00
Employment .236 .190 .355 .219 1.00
Notes: Regional shares of the U.S. total were calculated using average monthly JOLTS data from December 2000 to March 2008.
Source: Bureau of Labor Statistics.

Time series data on turnover and job openings reveal some interesting similarities and differences across regions as well. During the last recession, for example, all four regions experienced sharp declines in job openings. Even though each region started to recover later, only in the South and West had job openings reached their pre-recession levels by 2007. Interestingly, in the Midwest, job openings have been virtually flat for the past three years.

Job Openings

Hiring activity also declined in all four regions during the last recession. Once again, although each region had begun to recover by the end of 2003, hiring remained below pre-recession levels in the Midwest and Northeast. This picture, in conjunction with the separations data, implies that job reallocation has declined in the Northeast and Midwest over time. While high levels of separations and hiring could be inefficient if resources are being spent unnecessarily to reallocate workers across different firms, regions, and states, they could also indicate an active search by both workers and firms to find their best matches in the labor market.

Hires
Separations

Each region's relative shares could give further interesting details about regional labor markets. To this end, we construct relative shares of labor turnover and job openings for all four regions, adjusting each for the region's employment share. This is basically a ratio of two shares: the share of a region's job openings, hires, or separations over the share of a region's employment. So, for example, a ratio for hires greater than 1 for a particular region means it is hiring a higher number of workers than the U.S. average. Several features of the data stand out when interpreted in this way: First, the South leads U.S. averages in all dimensions. Second, regional job openings in the Midwest relative to the U.S. have been the lowest among the four regions. Its job openings rate has been around 20 percent below the average for the past two years. Interestingly, the Midwest looks like an average region when it comes to hiring and separations. In particular, separations are not disproportionately higher than the US average in the Midwest. Finally, the West stands out as a region that has a separation rate at least 30 percent below average during our sample period. Even though both the South and the West have the highest average hiring for the United States, the West is distinguished by lower reallocation due to lower separations than the South.

Proportion of U.S. Job Openings
Proportion of U.S. Hires
Proportion of U.S. Separations

Each region's net employment creation (hires minus separations) is significantly positively correlated with the U.S. total. This means that growth in total payrolls is associated with an increase in payrolls in the different regions. The correlation is highest for the South, another sign that is consistent with this region's leading role in employment creation. However, the correlations between the different regions are not very strong. Net employment creation in the Midwest has the lowest correlation with the other regions. This low correlation seems to stem from the low correlation of separations with other regions, not hires. This might indicate a structural change that is affecting only the Midwest, resulting in a regional labor market that does not follow the rest of the country.

Correlation: Net Hires

U.S. Midwest Northeast South West
U.S. 1 .58 .77 .81 .75
Midwest 1 .24 .29 .29
Northeast 1 .55 .47
South 1 .42
West 1
Notes: Seasonally-adjusted. Data for the U.S. total come from the sum of all four regions.
Source: Bureau of Labor Statistics.

JOLTS Regions

The states of the Midwest region are: ND, SD, NE, MN, KS, IA, MO, WI, IL, IN, MI, and OH.

The states of the Northeast region are: ME, NH, MA, VT, RI, CT, NJ, NY, and PA.

The states of the South region are: TX, OK, AR, LA, MS, AL, TN, KY, WV, VA, DE, MD, DC, NC, SC, GA, and FL.

The states of the West region are: WA, OR, CA, MT, ID, WY, NV, UT, CO, AZ, NM, HI, and AK.

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