Employers had 11.3 Million job openings in February, which is just short of the December record of 11.4million.
According to Ron Hetrick (senior economist at Emsi Burning Glass), the data shows that the labor market is tight and employers are engaged in a “brutal struggle” for low-wage workers. Ron spoke on Tuesday about the Labor Department data.
Many people are taking advantage many opportunities to change jobs, sometimes for better pay. Most people quitting are doing so to find a new job.
Economists pointed out that although workers may be leaving to seek better-paying work, the real problem in the labor market is the shortage of qualified employees to fill all the available positions. There were 1.8 job openings per unemployed worker in February. Prior to the pandemic there were more job openings than people who were unemployed.
Hetrick observed that “we keep recycling the same workers back-and-forth, and we aren’t getting new workers to the workforce.” Are we going to run out people to fill these service-level positions?”
The February resignation rate of workers is less than November’s record of 4.5 Million.
The oversupply of jobs has led to inflation. Many companies have had to increase their wages to keep and attract workers. Millions of Americans remain out of work, including older workers who might have chosen to retire early. Economists don’t know if they will return to the workforce.
Stephen Stanley, chief economist of Amherst Pierpont said that the data “shows how the labor market continues torrid.” He also shared this research note. The number of job openings fell by 17,000 in a month that saw the economy add 678,000 jobs. This speaks volumes about the labor market’s depth.
The Tuesday report is not part of the monthly government employment report. In February, it showed that employers had added a solid 678,000 jobs. Friday, April 1st will see the Labor Department release its March jobs report.
Low unemployment rate, almost pre-pandemic
At 3.8%, the unemployment rate is close to the 3.5% level before the pandemic, which was the lowest for five decades. There are still many million more people looking for work or working than before the pandemic. This forces employers to compete with a smaller labor force.
These trends have led Jerome Powell, Federal Reserve Chair, to focus on openings and quittings as an indicator of the health of the labor market and a target for the Fed’s interest rate policies. Powell stated that the central bank aims to reduce the available jobs in order to cool wage inflation and lower wages.
Powell stated that if you reduced the number of jobs available, there would be less upward pressure on wages. “We must use our tools to bring supply and demand back into alignment.
Employers were desperate for workers and wages rose by 4.5% in 2021. This is the fastest rate in over two decades. To cover higher labor costs, many businesses have increased their prices to customers.
The Fed announced earlier this month that it had increased its short-term rate to 0.375% for inflation control. This year is expected to see more rate increases, with possibly one or two half-point increases.
Powell hopes that the Fed will be able to bring down inflation by decreasing job openings and slowing wage growths without causing widespread layoffs or pushing unemployment higher. However, economists are skeptical that the Fed will achieve such a “soft landing”. They fear that Fed rate increases will lead to job losses, and possibly even a recession.
