“Most everyone who wants a job has one.”
Adam Kamins, Moody’s Analytics
Today, when American employers say, “Help Wanted,” they really mean it.
For the first time since the U.S. Labor Department began keeping records on it, U.S. job openings exceeded the number of unemployed Americans, 6.7 million to 6.3 million.
The U.S. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for April, from which those numbers come, has only existed since 2000. And much depends on how you define “unemployed,” as the labor force participation rate is still just 62.7%.
But clearly many employers who are seeking workers are finding it difficult to find them.
We concur with Hedgeye macro analyst Christian Drake, who wrote that “a hallmark of an efficient and well-functioning labor market is a fluid flow of workers – job openings and the creation of new positions is a direct measure of the economy’s health (or perceived health), and the more that companies are hiring and creating new positions, the easier it is for job-seekers to find work and for skill and need to find their most productive match. Conventionally, the churn and underlying dynamism of the labor market sits as a proxy for the health of the broader Macroeconomy.”
As the chart shows, workers who switch jobs are now seeing wage increases of more than 4%. Wages are finally making a rebound, after having dropped significantly during the Great Recession.
In addition, several records were broken in April:
- Job Openings. With a record 6.7 million job openings, practically anyone should be able to find a job today.
- Churn is a measure of how dynamic the labor market is at any given time. While 5.58 million people were hired in April, 1.7 million were laid off or fired, and 3.35 million quit their jobs. The total churn (hires + quits) reached an all-time high of 8.93 million.
- Potential workers per opening. The number of potential workers available for each job opening dropped to an all-time low of 1.71 in April.
“A tighter labor markets against a backdrop of solid economic activity means the balance of power inherently shifts from employers to employees with a growing demand-supply imbalance pushing prices (wages) higher, particularly for those with experience and in-demand skills,” according to Hedgeye.
Employers are responding, in many cases, by lowering qualifications for some positions.
“But employers are also increasingly moving down the worker quality supply chain as labor scarcity becomes more acute with the unemployment rate for high-school grads continuing to breach new lows and as the long-term unemployed re-enter the labor force in larger numbers,” Hedgeye continues. “To the extent the latter represent a growing fraction of the newly employed it will have a dampening effect on aggregate earnings growth.”