The Sign That The US Labor Market Is Still Going Strong
Jobless claims continue to fall and unemployment remains low, both are strong indications of a healthy labor market.
Concern about the state of the labor market grew steadily toward the end of the Covid pandemic and even as restrictions started easing. Due to the amount of “help wanted” signs hanging in store windows, it may feel like those concerns are still warranted. However, this week ends with great news. The total number of jobless claims fell once again – for the fifth week in a row.
One of the tools economists use to track the state of the job market is the number of new unemployment claims. In most years, those claims remain relatively consistent. However, thanks to the pandemic new unemployment numbers went through the roof. And they remained high long after restrictions started easing.
Things started looking up a few weeks ago, though. At the end of this week, new jobless claims came in at 213,000. That claim number is 5,000 lower than the previous week. And according to CNN, it is the lowest number of jobless claims since the end of May.
The drop in unemployment claims is good news for employers and employees alike. And the improvement even shocked the experts, who had forecasted a total of 226,000 jobless claims. All indications suggest that means the labor market is bouncing back.
However, even as the unemployment claim numbers started improving earlier this year, the labor market has not fully recovered. There are still nearly 1.5 million filing continued jobless claims. And that number rose from the previous week.
This number is particularly striking because of the amount of open and available positions nationwide. The Chairman of the Fed, Jerome Powell, calls the labor market “imbalanced.” There are far more open positions than workers – more than double, in fact.
The worker shortage is glaring. Walk into any store or organization these days, and you will see the gap. Employers are struggling mightily to hire staff and experts believe that may be impacting the drop in unemployment claims.
One suggestion they offer for the significant drop in new jobless claims is that employers may hang on to employees to try and fill the gap. If this is true, it could account for some of the customer service issues that have begun popping up around the nation. Employees who would get terminated with fully staffed businesses may get to keep their jobs, thanks to the staffing shortages.
No one has a great answer about why the labor market has such a drastic gap between job openings and workers. However, it is good news for employees in need of work. Jobs are still plentiful. You may just have to settle for one that isn’t your top choice.
Regardless, the state of the current labor market is far better than the rest of the economy. With inflation and a possible recession on the horizon, the federal government has taken some drastic steps. The Fed opted for steep interest rate hikes and reigning in monetary policy.
The hope is that by taking these steps, they can try to stop (or at least reduce) the impact of inflation. Whether or not we will see success with this tactic remains to be seen. But at least in the meantime, the labor market is looking up.
