Demand for US workers reaches historic high
Demand for workers reached a record high in October as U.S. businesses continued to scramble for workers.
Businesses posted 11 million job openings in October, the Labor Department reported Wednesday, in line with a historic peak recorded in July. Hires stayed even at 6.5 million while the total number of workers leaving their jobs fell off to 4.9 million.
Though the number of workers leaving their jobs on their own decreased slightly, the number of job openings per unemployed worker has never been higher.
Nick Bunker, economic research director at Indeed, said there were roughly 82 unemployed workers per job opening in October, the highest ratio of job seekers to vacant positions in history. He said the intense need for labor in the recovering economy helped drive the gap.
"While joblessness certainly isn't still back at levels we saw before the pandemic, there's so much demand that we're in a pretty hot, tight labor market," Bunker said.
"Toward the end of October, early November, we were seeing a labor market that was tilting the bargaining table a little bit more towards jobseekers than it has in the recent past."
Bunker said that while pandemic-related obstacles have made it harder to gauge the labor market, Wednesday's data on job openings and labor turnover was the latest in a series of signs of improvement.
The U.S. added 546,000 jobs in October and saw the unemployment rate drop to 4.6 percent, according to revised data released Friday by the Labor Department. Job growth slowed to a gain of 210,000 in November, but a steep drop in the unemployment rate to 4.2 percent reflected growing strength in the labor market.
While consumer spending has risen above pre-pandemic levels, many businesses have struggled to hire enough employees to meet the surge in demand. Bunker said that although there are still plenty of workers who've yet to find new jobs after the emergence of the pandemic, a smaller labor force has helped jobseekers raise the bar for accepting offers.
"It means that competition for workers is going to be higher, which means they'll have relatively more bargaining power and be able to negotiate for higher wages," Bunker said.
Wages rose at an annual rate of 5 percent in October, according to the Labor Department, though a 6.2 percent annual increase in consumer prices that month wiped out much of the benefit. Even so, the intense demand for workers has also allowed job seekers to be more selective and pandemic-conscious when looking for employment.
More than 4 million workers quit their jobs for the fourth consecutive month, Nationwide Financial Markets economist Scott Murray noted. Roughly half of those departing workers left jobs in the health care, retail and accommodation industries - all of which feature unavoidable in-person interaction
"Workers are heading for the exits in search of greener pastures and work-from-home opportunities," Murray wrote in an analysis.
"Businesses continue to hire at a brisk pace. Still, firms are creating new positions, and quitting remains high. As a result, finding qualified workers remained a challenge, a headwind for the recovery."
President Biden and Democratic politicians have touted the hot labor market as a sorely needed boost for the working class after an economic catastrophe following years of sluggish wage growth. Left-leaning economists have also said the high demand for workers could lead to enduring improvements in compensation and working conditions.
The intense demand, however, could also be putting additional pressure on high inflation at a potential turning point for U.S. economic recovery.
Moderate Democratic lawmakers, such as Sen. Joe Manchin (W.Va.), have expressed concerns about the potential inflationary impact of Biden's "Build Back Better" agenda, a $1.75 trillion social services and climate plan.
"We've got to make sure we get this right. We can't afford to continue to flood the market as we've done," Manchin said Wednesday.
Rising inflation has also boosted pressure on the Federal Reserve to begin pulling back on its near-zero interest rates and other stimulus for the economy.
Federal Reserve Chair Jerome Powell said last month that the bank will likely accelerate the pace of its tapering of bond purchases, which began in March 2020 to keep financial markets flowing through the pandemic. But the Fed is also facing calls to preview a faster series of interest rate hikes for next year, prompting concern from those who want to foster a stronger labor market.
"Current fiscal and monetary policymakers have clearly outdone their predecessors and have shattered past excuses for why Americans should settle for a shallow and sluggish employment recovery," wrote Skanda Amarnath, executive director at Employ America, in a Wednesday analysis.
"But before the Fed seeks to slow the pace of the expansion through possible interest rate increases, the Fed's mandate and its credibility still require that it - at a bare minimum - support a full return to the pre-pandemic labor market, both in terms of wage growth and age-adjusted employment rates."
