The Department of Labor revealed that the number of job openings is expanding, thereby worsening a labor market already placing immense pressure on businesses.
The agency’s most recent Job Openings and Labor Turnover Survey (JOLTS), which analyzes data from October, shows that there are 11.03 million job openings in the United States — exceeding the number of people actively searching for work by 3.6 million.
The JOLTS report is closely watched at the Federal Reserve and elsewhere for signs of labor market tightness…
The coronavirus pandemic has seen quits surge to what had been record highs. Even with October’s decline, the level is still 24% above where it was a year ago. Economists generally see the exodus as greater opportunity in the pandemic-era jobs market spurred by many workers still reluctant to come off the sidelines either because of child-care issues or health concerns.
Through November, the labor force was still about 2.4 million smaller than what it had been in February 2020. The total employment level was more than 3.5 million down.
Many point to historic levels of government stimulus programs as a contributing factor to low job market participation.
In an August interview with The Daily Wire, Rep. Kevin Brady (R-TX) — the Ranking Member of the House Ways and Means Committee, which is responsible for deliberating taxes and other fiscal policy measures — noted that the American Rescue Plan’s $300-per-week enhanced federal unemployment insurance was “crushing Main Street businesses.”
“Companies of all sizes simply can’t find the workers they need,” he observed, “whether they’re retailers, restaurateurs, or production lines — this is inevitable when you pay four out of ten Americans more to stay home than to work.”
Though the enhanced unemployment checks expired in September, Brady observed similar distortionary effects from Child Tax Credits. The lawmaker recalled a recent visit with a group of restaurant owners in Maryland — one of whom noted that a top employee was able to entirely quit her job because of the payouts.
“For the first time, it is divorced from work. That’s not a requirement for getting it, and so you’re seeing this barrier begin to impact businesses starting last week,” Brady said. “I think the point here is that the federal government is sending a seemingly never-ending supply of checks, regardless of whether you work or not. You’re going to have economic problems, and that’s what we’re seeing.”
Amid the tighter labor market — and inflationary pressures — many major companies are hiking wages. Roughly 39% of respondents in a Conference Board poll said that rising price levels are a motivating factor for the wage hikes.
However, higher pay does not necessarily correspond to higher living standards; since President Biden took office, Americans’ inflation-adjusted wages have been declining.
“The impacts of wages on inflation and of inflation on wages are now stronger than they have been in recent decades,” said Conference Board chief economist Gad Levanon.
The most recent inflation data from the Department of Labor reveal that consumer prices are increasing at a 6.2% clip — continually outpacing economists’ expectations and matching rates last seen three decades ago. Indeed, Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell recently said that officials should retire the term “transitory” as a descriptor for the current inflation environment.