There’s something odd happening in the labor market: US employees are gaining traction over employers.
Recovery from the pandemic was bizarre, the result of a collision between public health actions, economic relief provided by authorities and central banks, along with social changes motivated by the experience of enduring coronavirus. This has resulted in a labor market that seems at once too hot and too cold: The large number of long-term unemployed, for example, indicates a very loose labor market, although the number of companies who say they can’t fill jobs indicates a tight one.
On the hot side, among the most amazing facts is that the US market is now experiencing the highest rate of workers quitting their jobs which we’ve seen in the previous two years:
This is something you might expect at the summit of an economic cycle, but today it’s going on in the midst of a recovery. It suggests that workers are confident in their ability to find better paying or proper employment someplace else. But if that’s the case, why aren’t we seeing faster reductions in long-term unemployment, or more individuals re-entering the labor force?
What the highest quit rate in years signifies
The simplest explanation is that transitions take time. While companies might be ready for new workers–labour market data says there’s a job record for each unemployed person–there are still obstacles between them. One is simply access to vaccines, and companies working at reduced capacity while public health measures are being rolled back. Another may be child care, with daycare facilities nevertheless re-opening.
The most unusual reason may be that employees have options, and also a new sense of potential.
Many economists point to pandemic-driven expansions in unemployment insurance for a cause of slower-than-expected jobs expansion, although that does not directly affect the quit rate since UI is not readily available for people that leave jobs voluntarily. However, these advantages do provide already unemployed workers more time to wait around for greater choices in the labour market. Research suggests this contributes to better games and higher productivity, particularly for demographic groups such as women, minorities, and researchers.
As the market reopens, demand is surging both because of factors such as pent-up economies being spent and government stimulus payments. That is forcing the surfeit in accessible jobs, not only in sectors like hospitality, but also for builders connected to the country’s red-hot housing marketplace and in manufacturing. The pandemic also attracted a greater rate of retirements, making new opportunities for workers to move up the series.
Anecdotally, we are seeing businesses start to compete for new employees by offer