This study documents a general decline in the volatility of employment growth during the period 1956–2002 and examines its possible sources. We use a panel design that exploits the considerable state-level variation in volatility during the period. The roles of monetary policy, oil prices, industrial employment shifts, and a coincident index of business cycle variables are explored. Overall, these four variables taken together explain as much as 31% of the fluctuations in employment growth volatility. Individually, each of the four factors is found to have significantly contributed to fluctuations in employment growth volatility, although to differing degrees.