Wyoming Labor Force Trends
November 2024 | Volume 61, No. 11
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Labor Market Churn in the U.S. Mining & Logging Sector
by: David Bullard, Senior Economist
An earlier article in Wyoming Labor Force Trends examined labor market churn in the U.S. and Wyoming (Bullard, 2023). Churn is defined as hires plus total separations. In other words, it represents movement in and out of employment. If all workers stayed at their jobs and no new individuals were hired, churn would be zero. Churn can be high both for good reasons (lots of hiring) or for bad reasons (layoffs or quits). Among the conclusions of the earlier research was that “the amount of churn in the labor market is much larger than the net job gains reported every month.”
This article uses data from the Job Openings and Labor Turnover Survey (JOLTS), which is conducted by the U.S. Bureau of Labor Statistics (BLS). It focuses on the U.S. mining & logging sector and compares it to total employment. Although JOLTS produces data at the state level, small sample sizes do not allow for any industry-level detail to be published for states.
Figure 1 shows the churn rate for mining & logging and compares it to the churn rate for total employment. Interestingly, churn in mining & logging was higher than total churn from mid-2015 to early 2019. This period started with low oil prices and many layoffs, but then hiring picked up in 2017 and 2018. Later, mining & logging churn was noticeably lower than total churn for much of 2019 to 2022. After the layoffs in 2020, mining employment was slow to recover.
The total U.S. unemployment rate and the unemployment rate specifically for the mining sector are shown in Figure 2. The unemployment rate for the mining sector is not seasonally adjusted, so it does not appear smooth like the total unemployment rate. Across the entire time period shown, the average unemployment rates were very similar: 5.7% in mining and 5.8% for total. However, unemployment in the mining sector ranged from a low point of 0.3% in October 2005 to a high of 19.3% in February 2021. On the other hand, total unemployment ranged from 3.4% in January and April 2023 to 14.8% in April 2020. In other words, there were many more extreme values (both high and low) for unemployment in the mining sector. This is likely related to the boom-bust cycles typical of the mining sector.
While both unemployment series in Figure 2 followed the same general pattern with high unemployment during the Great Recession and during the pandemic, there were two periods where they diverged. From January 2015 to October 2016, the unemployment rate for mining was much higher than total unemployment. This was a period of low oil prices and layoffs in mining. Additionally, while the total unemployment rate fell very sharply after its initial April 2020 spike at the beginning of the pandemic, the unemployment rate for mining remained very high until late 2021.
Employment in the U.S. mining sector is presented in Figure 3. There were three peaks in mining employment: September 2008, September 2014, and January 2019. The troughs in employment occurred in October 2009, October 2016, and February 2021. It is important to note that each successive trough of employment was lower. The October 2009 trough was 660,000 jobs, the October 2016 trough was 644,000 jobs, and the February 2021 trough was 539,000 jobs. Furthermore, the January 2019 employment peak was lower than either of the earlier peaks. Even though the mining sector is dominated by large cyclical ups and downs, the overall trend since 2014 seems to be negative with employment decreasing.
Figure 4 shows the churn rate and the unemployment rate for mining & logging. Churn represents movement in and out of employment in a particular sector. There were two main periods where the churn rate was substantially higher than the unemployment rate. These were times when employment was growing rapidly in the mining sector. From August 2003 to late 2008, churn was much higher than unemployment in the mining sector. The Baker Hughes rig count for the U.S. more than doubled from 837 in early 2003 to 2,031 in September 2008, suggesting very strong growth in oil & gas drilling activity. The second period was from August 2016 to early 2020. During those years, mining employment trended upward (see Figure 3).
Figure 5 breaks out the churn rate into two components: the hires rate and the total separations rate. When the hires rate was greater than the total separations rate, there was a net increase in employment. On the other hand, when the total separations rate was greater than the hires rate, employment decreased. Three periods stand out where the separations rate was greater than the hires rate: The Great Recession (October 2008 to October 2009), the energy sector slowdown (October 2014 to October 2016) and the pandemic (March 2020 to October 2020). During those three periods, mining employment fell dramatically.
Next, the total separations rate is broken out into its three parts: quits, layoffs & discharges, and other separations (see Figure 6). The BLS (2023) defines quits as “employees who left voluntarily, with the exception of retirements or transfers to other locations.” Layoffs & discharges “includes involuntary separations initiated by the employer, such as layoffs, ... discharges resulting from mergers, downsizing, or closings; firings or other discharges for cause; terminations of permanent or short-term employees; and terminations of seasonal employees." Other separations includes “retirements, transfers to other locations ... and deaths.”
During about two-thirds of the time (190 months), the quits rate was higher than the layoffs & discharges rate. This was especially true when employment was growing rapidly (2004 to 2008 and 2017 to 2018). However, the layoffs & discharges rate was higher than the quits rate in 81 months. These times included the Great Recession (January 2009 to March 2010) and the pandemic (March 2020 to October 2020). Other separations were generally much lower than quits or layoffs & discharges. During several months of 2015 and 2016, however, other separations rose above their typical level. It is possible that significant numbers of workers retired at that time.
In summary, the U.S. mining sector has been through some large ups and downs in the past two decades. There were three main periods where mining employment fell significantly: the Great Recession, the energy sector slowdown of 2015 to 2016, and the pandemic. Unfortunately, each successive employment trough has been lower than the one before, suggesting a general downward trend in mining employment. Since JOLTS data are available for every major sector, similar analyses could be conducted for other industries.
References
Baker Hughes. North American Rotary Rig Counts through 2016. Retrieved August 30, 2024 from https://bakerhughesrigcount.gcs-web.com/static-files/61a54cab-f19e-42c5-9596-d1823737aef7
Bullard, D. (2023, November). Labor market churn in the U.S. and Wyoming. Wyoming Labor Force Trends, 60(11). Retrieved August 29, 2024 from https://doe.state.wy.us/LMI/trends/1123/a1.htm
U.S. Bureau of Labor Statistics. (2023). Job Openings and Labor Turnover. Retrieved September 27, 2023, from https://stats.bls.gov/news.release/pdf/jolts.pdf
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