1 big thing: The worker's job market
Data: U.S. Bureau of Labor Statistics, FRED; Chart: Will Chase/Axios
The unprecedented upheaval of a year-plus of pandemic life is playing out in the job market.
Why it matters: The unemployment rate remains stubbornly high. At the same time, the Great Resignation has companies across the country trying desperately to hold on to staff as employees act on pent-up demand for job changes.
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The pandemic also led some people to relocate, and to rethink their careers and what they want out of life — contributing to a mismatch of available jobs to available workers.
The result? Chaos.
By the numbers: There are 6.7 million fewer Americans working now than there were before the pandemic. The unemployment rate is 5.9%, compared to 3.5% in February 2020. On the plus side, about 16 million net jobs have been filled since April 2020.
Four metrics from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey help paint the picture.
Job openings are at a record high of 9.2 million.
For every one opening, there is one unemployed American. This is a considerable improvement from April 2020 when there were five unemployed per opening.
In response, businesses across all industries have been raising wages. A growing percentage of companies are advertising hiring incentives like cash signing bonuses.
Hirings aren't even close to keeping pace with new job openings.
In May, the ratio of hires to job openings fell to an all-time low of 0.64.
Numerous factors are holding workers back, including concerns about the coronavirus, child care issues, comfortable financial safety nets, and the enhanced unemployment benefits that are currently rolling off on a state-by-state basis.
There are also an estimated 1.7 million people who retired early during the pandemic.
Layoffs and firings are at an all-time low.
The more that companies struggle to hire, the less they are letting go of the workers they do have.
In fact, it may be the case that workers are underestimating how much leverage they have with their employers.
Quits are at record highs as workers seek out better opportunities.
The share of departing workers (layoffs, firings, retirements, deaths) who quit is 67.8%, the second-highest ever.
Quit rates are particularly high in lower-wage service jobs like those in the leisure and hospitality industries, which likely reflects some trading up to better positions.
Between the lines: This optimism toward the labor market may seem to be in conflict with the fact that 9.5 million Americans identify as being unemployed.
Federal Reserve Chair Jerome Powell addressed the topic during a press conference on Wednesday. Few people follow the labor market as closely as Powell, since one of the Fed's jobs is to help the economy achieve maximum employment.
He said the real-world process for securing a job is a "time intensive, labor intensive process, and there may be a bit of a speed limit on that."
The big picture: The balance of power in the labor market is unusually slanted in favor of workers, who are asking for raises, who are getting poached by competitors, who are switching careers, and in many cases who are just leaving the labor force altogether.
The bottom line: The labor market wouldn’t be this favorable for workers if not for an economy that’s growing at such a high clip that there are shortages. As companies increasingly hire and continue to raise wages, that’s more money in the pockets of consumers who can spend it, perpetuating a virtuous cycle of economic growth.
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