More people are telling their jobs to ‘shove it’ amidst record quits

A sign at a McDonalds Drive-Thru explaining why a worker quit their job
The sign was apparently posted in Louisville, Kentucky.

  • The “take this job and shove it” indicator is high due to lack of childcare, covid fears, and migration.
  • DataTrek looks at how many job separations come from quitting, and told Insider “employers are not raising wages enough.”
  • But it may come down soon as schools reopen and more people reenter the labor force.
  • See more stories on Insider’s business page.

In May 2021, workers were still quitting their jobs in droves – yet another strange facet of the slowly recovering economy.

According to recently released data from the Bureau of Labor Statistics, 3.6 million workers quit their jobs in May, a month when there was one available worker for every job open (and there were 9.2 million jobs open). In April, the quit number was a record-breaking 4 million.

DataTrek Research has its own tracker for how many of the job separations in a month were from quits – the “take this job and shove it” indicator. That indicator reached its second-highest rate recorded in May 2021, with 67.8% of job separations driven by quits.

This number was higher in the particularly quit-heavy leisure and hospitality industry, Axios first reported; it came in at 76.4%.

The number is still slightly lower than April’s record-breaking high of 68.8%. Jessica Rabe, DataTrek’s cofounder, told Insider that quits are still driven by reduced access to childcare and fears of infection. Also significant: Workers relocating to the suburbs from urban centers.

But quits – and the “take this job and shove it” indicator – may have peaked in April. Schools are set to reopen in the coming months and enhanced unemployment benefits ending could get more people back in the labor force.

“We think the bulk of people disenfranchised by their jobs have quit by now, given this difficult nature of the pandemic over the last year,” Rabe said. “We think the only caveat is if the Delta variant or others do take off and we get another raft of workers in customer service jobs quitting their jobs again, even with higher wages, but it won’t likely be as big as the first wave.”

Yes, wages are on the rise

That reading comes as leisure and hospitality workers say they’re not going to return to their previous positions. Insider’s Grace Dean reports that a third of hospitality workers said in a Joblist survey that they won’t ever return to the industry.

Those respondents want a new work experience, along with higher wages and better benefits. That’s not to say that leisure and hospitality isn’t growing: The sector made up 40% of jobs gains in June, according to the Bureau of Labor Statistics, and added 343,000 payrolls. Wages also grew for leisure and hospitality workers at a breakneck speed, soaring 7.1% in the past year.

Even so, the quits rate in leisure and hospitality was 5.3% in May. That could be due to those wage hikes raising low wages to just slightly less low. In June, the average hourly earning for nonsupervisory private employees was $25.68. It was nearly $10 lower for leisure and hospitality workers, coming in at $16.21.

Those conflicting numbers show a strange new pandemic trend: High unemployment, coupled with high job openings. Generally, unemployment is driven down as job openings go up – since people are presumably filling those roles. That doesn’t seem to be happening here.

“The large labor shortage and elevated quits rate also shows employers are not raising wages enough,” Rabe said, “which is constraining hiring.”

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Job openings climb to record highs in May as the worker shortage charges on

Starbucks Now Hiring sign
A ‘We’re Hiring!’ sign is displayed at a Starbucks on Hollywood Boulevard on June 23, 2021 in Los Angeles, California.

  • US job openings rose to 9.21 million from 9.19 million in May, marking another record high.
  • Economists expected openings to hold at 9.3 million. The reading still marks a fifth straight jump.
  • Openings matched the number of jobless Americans for the first time since the pandemic began.
  • See more stories on Insider’s business page.

Job openings in the US edged higher in May as businesses continued to jostle over an unusually small supply of workers.

Openings rose to a record-high 9.21 million from 9.19 million last month, according to Job Openings and Labor Turnover Survey, or JOLTS, data published Wednesday. That landed below the median estimate of 9.33 million from economists surveyed by Bloomberg.

Job listings climbed for five straight months as vaccination began and reopening led businesses to hire. The May increase in openings also came as hiring rebounded after dismal growth in April. Taken together, the data suggests the nationwide labor shortage grew somewhat less intense as the US entered summer.

June’s payrolls data further supports the outlook. Job creation improved again, with the US adding the most payrolls since August. Still, the unemployment rate ticked slightly higher and labor force participation held steady, implying continued slack in the job market.

Experts largely expect the labor market’s recovery to accelerate further through the summer as various factors keeping Americans from work fade. The start of the school year should ease childcare pressures and the ending of enhanced unemployment benefits should also boost participation, Federal Reserve Chair Jerome Powell told lawmakers in June. There also “may be a bit of a speed limit” on matching people with openings, but that process should play out into the fall, he added.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he said in June 16 press conference. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

Hiring, layoffs, and job availability

The monthly JOLTS data – which lags the corresponding jobs report by one month – provides even more detail around pandemic-driven dislocations in the labor market. The survey took on even more relevance as the labor shortage emerged, giving economists insight into which pockets of the economy are struggling the most to rehire.

Broadly, there was an opening for every available worker in May, compared to 1.1 in April. The ratio shows the US boasting as many openings as workers for the first time since the COVID-19 recession began. By comparison, it took roughly 8 years after the financial crisis for openings to match workers.

The state and local government education and educational services sectors added the most openings, with gains of 46,000 and 35,000, respectively. The arts, entertainment, and recreation sector lost the most openings with a decline of 80,000.

Quits, which soared to all-time highs in April, fell slightly to 3.57 million from 3.99 million. Quits were most common in the professional and business services sector. While down from the April reading, the elevated quits count signals Americans are confident in their abilities to find better jobs as the economy recovers.

Layoffs also fell slightly to 1.37 million from 1.45 million. The layoffs rate dipped to a record-low 0.9%.

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The economy is getting better, but the rest of 2021 will be far from normal

Job fair Florida
A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • The 2021 economy has been a wild ride with reopenings, people quitting jobs, and firms desperate to hire.
  • Economic data points to improvements in the second half of the year as wages rise and jobs increase.
  • But not for everyone. Unemployment for teenagers and Black and Hispanic workers is still high.
  • See more stories on Insider’s business page.

Halfway through 2021, the June jobs report signals a good step forward, but let’s not call this economy “normal” just yet. Things are still kinda weird.

The US added 850,000 jobs last month, beating estimates and showing a strong acceleration in the labor market’s recovery. It was the largest one-month jump since August and the sixth straight month of gains. After a bumpy six months for the labor market’s recovery, it’s starting to look like smoother sailing.

But it’s still choppy. While the sectors that transitioned to remote work have regained almost all lost jobs, those hit hardest remain far from healed. And while pandemic lockdowns have reversed, businesses will have to rehire in a wholly new environment.

The first strange signs for the economy came in April, when vaccinations were running ahead of schedule and reopening started in earnest. The jobs report that month was expected to show 1 million payrolls added, but it was a paltry quarter of that figure. Job openings sat at record highs, but factors ranging from virus fears to childcare costs kept workers on the sidelines. It was better than fears of a double-dip recession – when jobs unexpectedly dropped in December – but it was decidedly abnormal.

As the country reopens, the post-pandemic labor market is taking shape. It has little in common with the one left behind in early 2020.

An early look at the new job market

Working from home redefined employment, real estate, even culture in 2020. It’s shrinking back from its widespread adoption, but it may be here to stay. Despite many state and local governments reversing their strictest economic restrictions, roughly 14% of Americans still telecommuted in June.

The labor shortage remains an obstacle for businesses looking to hire, and it’s having an effect on workers’ pay. Average earnings climbed again in June. Pay grew the most in the leisure and hospitality sector, suggesting higher pay helped businesses hire more workers.

On the other end of the market, only 10% of job seekers are urgently looking for work, according to hiring giant Indeed. Most are taking a more leisurely approach, citing virus fears and financial cushions. June data reflects that relaxed pace; the number of people actively looking for a job was flat and the unemployment rate edged higher to 5.9%.

And while job growth broadly improved in June, the recovery is still leaving several groups behind. Despite a hiring bonanza for low-wage jobs, unemployment among teenagers rose to 9.9% from 9.6%. Unemployment among Latinos rose 0.1 point to 7.4%, while Black unemployment gained to 9.2% from 9.1%. That compares to the 5.2% unemployment rate seen among whites.

Relief programs for unemployment and student loans are about to end

There’s reason to believe Americans will take more jobs in the months ahead.

Several states are just starting to end the federal boost to unemployment insurance (UI) ahead of its September expiration. Twenty-six states in total – all but one are Republican-led – are set to end the benefit early in an effort to spur hiring. And jobless claims data suggests the effort is working. Filings for UI fell to a new pandemic-era low last week.

Other government relief programs, including the student-loan freeze, are also set to lapse in the fall. Economists refer to the deadline as a “fiscal cliff” and expect it to drive more Americans into the workforce.

Continued vaccinations, school reopenings, and reskilling should have a similar effect, Federal Reserve Chair Jerome Powell said in a June 16 press conference. Childcare costs and virus fears kept countless Americans at home, unable to find work. As those pressures diminish in the coming months, it’s likely worker supply will more closely match labor demand, Powell said.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he added. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

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The number of people who are unemployed because they quit their jobs is at its highest point of the pandemic

Now Hiring sign
A customer walks by a now hiring sign at a BevMo store on April 02, 2021 in Larkspur, California.

  • In June, 942,000 people were unemployed because they voluntarily quit, a pandemic-era high.
  • It reflects labor-market tightness, which is strange when 9.5 million are out of work.
  • Wages also ticked up in June, although they still remain relatively low for leisure and hospitality workers.
  • See more stories on Insider’s business page.

While the number of jobs added in June trounced expectations, another measure also paradoxically ticked up: More unemployed people said their reason for being jobless was quitting than any other month of the pandemic.

In June, 164,000 more unemployed people quit or voluntarily left their jobs, according to data from the Bureau of Labor Statistics, bringing the total number of so-called job leavers to 942,000 for the month. That latter figure is a new pandemic-era high for people who quit and remain unemployed.

It continues a trend of elevated quits throughout the last couple of months, showcasing that while recovery may be on the horizon, the labor market is still pretty weird.

Job vacancies reached record highs in April, according to BLS, a month when the total number of Americans leaving their positions hit a 20-year record: 4 million Americans quit their jobs that month. That data includes people who quit and found new jobs.

The number of people quitting might show that workers are still choosier about their jobs and work, especially as employers vie to lure them in with everything for $50 to show up for an interview to hiring bonuses. The number of quits also comes as 26 states move to end their participation in federal unemployment benefits, a measure that many governors explicitly implemented to compel workers back into the workforce.

Some workers had been “rage quitting” their positions during the pandemic amidst poor working conditions and low wages, Insider’s Áine Cain previously reported.

Wages also ticked up in June, potentially indicating that employers are being forced to increase wages to lure in and retain workers. The average hourly earnings for all workers rose by 10 cents to $30.40 in June, following increases in April and May; in fact, the jump between April and May marked the fastest rate of wage growth since 1983 (excluding a 2020 lockdown-driven spike).

For instance, leisure and hospitality made up a large chunk of gains in June, adding 343,000 jobs. That industry has seen consistent strong wage growth over the last few months, and just hit $16.21 in hourly earnings. It’s also an industry that saw elevated quits in April, before wages climbed up even higher. That could support claims that raising wages across the board might be one solution for bringing workers back.

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June jobs report trounces expectations with 850,000 payroll gains as labor-market recovery picks up

Job interview california
Ray Liberge, 48, of Lawndale, talking to Jacky Estrada, the human-resources manager for the Zislis Group, after getting hired as a line cook at Rock’N Fish in Manhattan Beach, during a job fair at The Brews Hall in Torrance.

  • The US added 850,000 payrolls in June, beating the median estimate of a 720,000-payroll gain.
  • The unemployment rate rose to 5.9% from 5.8%. The median estimate was for a drop to 5.6%.
  • The payrolls increase is the largest since August and marks a sixth straight month of additions.
  • See more stories on Insider’s business page.

Hiring accelerated again in June as Americans returned to the workforce and reopening further juiced demand.

The US economy added 850,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday. The median estimate from economists surveyed by Bloomberg was for an increase of 720,000 jobs. The data suggests the labor shortage waned as businesses raised pay to attract workers.

The June print marks the strongest month of job growth since August and the sixth consecutive month of payroll additions. May payroll additions were revised to 583,000 from 559,000.

The unemployment rate rose to 5.9% from 5.8%. Economists expected the headline rate to hit 5.6%.

The labor-force participation rate was unchanged at 61.6%. The metric has become the go-to gauge for tracking the nationwide labor shortage. Hiring unexpectedly slowed through the spring as virus fears, childcare costs, and enhanced unemployment insurance kept Americans from seeking work. Firms have since raised wages to pull in job applications.

Average hourly earnings rose again, by 10 cents, to $30.40. The gain signals firms still lifted wages into the summer to speed up their hiring efforts.

“This pace of progress is solid and it looks like things can get even better,” Nick Bunker, an economic research director at the hiring website Indeed, said. “There’s still quite a bit of damage left to repair, but today’s report suggests that we may rebuild sooner rather than later.”

Snapshot of recovery

The monthly BLS report is among the most detailed snapshots of the labor market’s performance and gives new insights as to how the broader economy is recovering.

Even after the month’s stronger hiring, about 9.5 million Americans remain unemployed. Total payrolls are still about 6.8 million shy of their pre-pandemic peak.

The U-6 unemployment rate – which counts Americans working part time for economic reasons and those marginally attached to the workforce – rose to 10.1% on an unadjusted basis from 9.7%.

Gains were largest in the leisure-and-hospitality and accommodation sectors, where businesses added 343,000 and 75,000 payrolls, respectively. In leisure and hospitality, restaurants and bars counted for more than half of the gain.

The construction industry lost the most jobs, with a decline of 7,000 payrolls.

Roughly 6.2 million Americans named the pandemic as the primary reason their employer ended operations, down from 7.9 million. About 1.6 million cited the pandemic as the main reason they didn’t seek work, down from 2.5 million in May.

The share of Americans telecommuting fell to 14.4% through the month. That compares with the May share of 16.6%.

Experts see encouraging growth through the 2nd half

June stands to represent a turning point for the labor market’s recovery. The month saw the first few states end the federal boost to unemployment insurance ahead of its September expiration. Twenty-six states – all but one governed by Republicans – have announced plans to prematurely cancel the benefit, saying the move should encourage Americans to return to the workforce.

While the set of cancellations aren’t reflected in the June jobs report, jobless claims data out Thursday suggests the plan is working. Filings for unemployment benefits fell to 364,000 last week, beating economist estimates and marking a new pandemic-era low. Continuing claims still rose, suggesting Americans on unemployment insurance weren’t yet rushing to find jobs.

Survey data backs that up. Just 10% of surveyed job seekers urgently sought work in late May and early June, Indeed said. The most cited reasons for the slow return to work were virus fears, employed spouses, and financial cushions.

Those factors keeping Americans from taking jobs should fade as schools reopen and vaccination continues, Federal Reserve Chair Jerome Powell said. Americans can look forward to “strong job creation building up over the summer and going into the fall,” he told reporters during a June 16 press conference.

He added that while hiring stumbled in April, some of the slowdown was most likely caused by a skills mismatch between workers and open jobs. There “may be something of a speed limit” on the recovery as people look for work in new areas, Powell said.

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Only 10% of job seekers are rushing back to the workforce, hiring giant Indeed says

Job fair coronavirus florida
  • Just 10% of job seekers are urgently looking for work as firms rush to rehire, according to Indeed.
  • Virus fears and employed spouses were the most common reasons cited for non-urgent job searches.
  • More Americans should return to work as schools reopen and COVID fears fade, economist Nick Bunker said.
  • See more stories on Insider’s business page.

Businesses are jostling to rehire faster than their competitors as demand booms. The vast majority of jobless Americans can’t be bothered.

For several months now, an extraordinary labor shortage has held back the economic recovery, as job openings rocketed to record highs, but hiring has fallen below economist forecasts. More than 9 million Americans remain out of work, but for reasons ranging from enhanced unemployment insurance to childcare costs, they’re in no rush to find jobs.

New data from hiring website Indeed adds to this picture. Just 10% of job seekers were “urgently” looking for work in late May and early June, according to a survey of 5,000 Americans. About 30% said they’re not open to searching for work at all, and over 40% said they’re only “passively” looking for jobs.

INDEED
Source: Indeed Hiring Lab

Some of the disparity comes from many job seekers already working, Nick Bunker, economic research director at the Indeed Hiring Lab, wrote in a blog post. The share of Americans urgently seeking work was twice as large for jobless Americans as it was for employed people. And many more employed Americans were passively looking for work.

The survey also debunked some theories as to what’s keeping Americans from rushing back to work. Among those not urgently seeking jobs, more than 20% cited virus fears as a reason for the holdup. Employed spouses and financial cushions were the second- and third-most cited reasons, respectively.

Less than 10% of respondents said enhanced jobless benefits were a reason for their lax job hunts, according to the survey. That stands in contrast with a top Republican talking point through the spring. GOP lawmakers frequently blamed UI payments for weak job take-up, and Republican governors in 25 states have moved to end the supplement before its September expiration.

To be sure, Indeed’s survey was conducted just before some states began rolling back the federal UI boost. But the data signals other factors played a much larger role in keeping Americans from joining the workforce.

Others are simply waiting for circumstances to improve. Nearly 30% of unemployed workers not searching urgently said they’re waiting for vaccinations to increase before seeking jobs. Another 30% said they’re waiting for more job opportunities, and 13% said they’re waiting for schools to reopen.

Indeed isn’t the only firm finding a wide range of factors keeping Americans from taking jobs. The pandemic fueled disruption throughout the labor market, making rehiring much more difficult than just placing Americans where they previously worked, Julia Pollak, a labor economist at ZipRecruiter, told Insider’s Juliana Kaplan.

“Some workers think their industry will never recover, and retire early. Others take a layoff personally, and opt not to return if they’re recalled,” she said. “That means returning to work requires a lot of new hiring – which is time-consuming.”

The combination of factors suggests job seeking will grow more urgent in the fall, Bunker said. After a months-long gap between business demand and worker interest, the labor market should balance out as the economy heals further.

“Many employers want to ramp up hiring quickly, but a large portion of job seekers are hesitant to start jobs now,” he said. “The further decline of COVID-19, the end of enhanced UI, and the return of school in the fall are factors that could increase the intensity of job searches by the unemployed.”

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The 5 sectors struggling the most with hiring and what it says about the reopening US economy

Warehouse New York coronavirus
  • A labor shortage is slowing the US economic rebound, but its effects aren’t evenly spread.
  • While job openings have skyrocketed, some sectors are seeing little take-up as people return to work.
  • Detailed below are the five industries having the hardest time hiring through the economic reopening.
  • See more stories on Insider’s business page.

Various signs point to a historic labor shortage in the US economy. But not all sectors are experiencing the same pain.

What began as a strong recovery for the labor market hit a major snag in the spring: Americans weren’t rushing back to the workforce. Hiring slowed sharply in April and missed expectations again in May. Wage growth soared through both months as employers looked to attract workers. Both job openings and quits hit all-time highs in April.

Alleged causes of the worker shortage are abundant. Democrats see expensive childcare and COVID-19 fears as holding Americans back from seeking work. Republicans have blamed the shortfall on President Joe Biden’s stimulus plans, specifically the federal government’s $300-per-week boost to unemployment insurance.

But while lawmakers paint the shortage as an issue plaguing the broad economy, some sectors are having far harder times at hiring compared to their pre-pandemic trends. Data published in last week’s Job Openings and Labor Turnover Survey report reveals where companies are struggling the most to rehire.

1. State and local governments

Virginia state capitol

The $1.9 trillion stimulus package passed in March included $350 billion for state, local, and tribal governments, but the sector is still having a rough go of hiring as the US reopens.

While the federal government can — and almost always does — run an annual budget deficit, states need to balance their budgets. This typically leads to layoffs during recessions, since weaker tax revenues place new pressure on states’ budgets. The lack of sufficient aid for state and local governments led to intense and prolonged economic pain in the years after the financial crisis.

Congress aimed to avoid such an issue in the current recovery, but aid hasn’t yet helped hiring. And when state and local government education jobs are excluded, the sector’s openings are seeing very little uptake.

2. Educational services

teacher

The education sector has also seen unusual tightness during recent months. The industry faced intense pressure at the start of the pandemic amid a shift to remote learning. Schools and universities are now set to return to at least partial in-person teaching in the fall, but efforts to rehire are coming up short.

The pipeline for teachers, which make up a large share of hires in the sector, is also drying up. Teacher-training enrollment dropped by 33% over the past decade, according to an August report from the Center for American Progress. With the new school year a few months away, hiring needs are likely to intensify further.

3. Transportation, warehousing, and utilities

amazon employee

Giants like Amazon and Walmart saw activity surge throughout the pandemic as more Americans shopped from home. With millions returning to work, the businesses are raising wages amid efforts to boost their headcounts.

But while the industry went on a hiring spree throughout the pandemic, new reports show intense burnout dragging on employment. Amazon, for example, holds an annual turnover rate of 150%, The New York Times reported on Tuesday.

While the company doesn’t represent the entire industry, it’s on its way to becoming the biggest employer in the US. And other reports of burnout among delivery drivers and warehouse employees suggest the turnover is pervasive.

4. Manufacturing (non-durable products)

poultry plant

Manufacturers of non-durable goods — those that are consumed relatively quickly — face short- and long-term hiring pressures.

As the US reopens, a wave of pent-up demand has left factories on the back foot. Shortages of key materials formed massive bottlenecks, and order backlogs hit multiple record highs through the spring.

Economists believe that, as spending cools, such shortages will fade and factories can better service demand. But the industry is also staring down a massive skills gap. Decades of steering Americans toward top universities and away from trade schools evaporated the industry’s hiring pool. A May study from Deloitte and the Manufacturing Institute found that, unless the trend is countered, manufacturers could leave as many as 2.1 million jobs unfilled.

“There’s a perception problem,” Carolyn Lee, executive director of The Manufacturing Institute, told Insider last month. “People don’t know that there are jobs that are desirable, that there are jobs that have family-supporting wages, and that there are jobs that are stable.”

5. Arts, entertainment, and recreation

Closed Broadway coronavirus.

Theaters, recreation centers, and other entertainment venues were among the businesses hit hardest by pandemic restrictions. Reopening has given the industry a new lease on life, with concert tours now resuming and venues allowed to open with some limitations.

Yet the country is still far from putting the pandemic behind it. Only about 49% of Americans are covered by COVID-19 vaccines, according to Bloomberg data. And while daily case counts plummeted in recent months, the country is still adding nearly 11,000 cases each day.

Hiring in arts, entertainment, and recreation bounced back as lockdown measures were reversed. Yet lingering COVID-19 fears and the inability to fully reopen are likely weighing on the sector.

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Having a job right now means longer hours and slow pay growth

restaurant worker New York City NYC
A restaurant worker wears a protective face mask and gloves in midtown as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 13, 2020 in New York City.

  • While new hires are benefitting from rising pay and new incentives, employed Americans face worsening conditions.
  • The average workweek rose through the spring, and wage growth for the employed weakened.
  • The trends come as quits sit at record highs, suggesting Americans are leaving jobs to benefit from the labor shortage.
  • See more stories on Insider’s business page.

Americans waiting to rejoin the workforce have a lot going for them. Businesses rushing to rehire are raising wages and throwing in other incentives ranging from signing bonuses to free iPhones.

It’s another story for employed Americans. By some measures, their work lives are actually worsening.

The sudden reopening of the US economy placed the labor market in a unique spot. After years of strained job supply and an abundance of workers, the formula flipped. Employers were suddenly struggling to hire, and workers were in short supply.

The so-called labor shortage has led businesses to step up their efforts to attract workers. Average hourly earnings ballooned for two months straight as employers boosted pay, particularly for new hires. But for those already employed, data shows a decline in conditions.

For one, average weekly hours have crept higher through the spring. Work hours dipped slightly to 34.3 in May, landing just below 20-year highs. The latest reading compares to a pandemic-era low of 33.4 hours. Some of the uptick is likely due to part-time workers converting to full-time, but the trend could also suggest employed Americans are working more as the country rebounds.

Wage Growth Tracker
Source: The Federal Reserve Bank of Atlanta.

Those additional hours are also yielding less in return. Wage growth for already-employed Americans has been on the decline through the year, most recently falling to an unweighted three-month moving average of 3% from 3.2% in May. By comparison, the average rose as high as 3.9% in late 2019.

The growing workweeks and slowing pay growth come amid a major shakeup in the US labor force. Quits rose to a record high in April, according to JOLTS data published last week. At the same time, payroll growth slowed sharply and job openings leaped to a record high. Taken together, the data signals a broad rethink of how Americans work and what they demand as compensation.

A Monday report from the Federal Reserve Bank of New York shed new light on the unusual labor-market situation. The mean perceived probability of losing one’s job fell to 12.6% in May, the lowest level since the Fed’s survey began in 2013.

Yet the mean perceived probability of finding a job after losing work rose to 54% from 49.8%, according to the report, the largest one-month gain on record and the gauge’s highest level since February 2020. The gain suggests Americans are the most confident in their chances of finding work since the pandemic recession began.

With quits at record highs and incentives for new hires growing more attractive, workers could be switching jobs to take advantage of the labor shortage and extraordinary demand from employers.

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Job openings rise to new record-high in April as US labor shortage slows hiring

Hiring sign labor market coronavirus
People walk by a Help Wanted sign in the Queens borough of New York City on June 04, 2021 in New York City.

  • US job openings jumped to 9.3 million from 8.3 million in April, setting a new record high.
  • The reading comes in above the median estimate of 8.2 million and marks a fourth straight gain.
  • Roughly 1.1 Americans competed for every opening, down from 1.2 as the labor shortage intensified.
  • See more stories on Insider’s business page.

Demand for workers in the US intensified in April as nationwide reopening squared off with an unprecedented labor shortage.

Job openings rose to a record-high 9.3 million from 8.3 million in April, according to Job Openings and Labor Turnover Survey, or JOLTS, data released Tuesday. Economists surveyed by Bloomberg held a median estimate of 8.2 million openings.

The reading marks a fourth consecutive jump in openings. The report also sheds more light on how the labor market performed through April. The month’s nonfarm payrolls report, released in early May, showed hiring drastically slowing as businesses reported difficulties finding workers.

The April payroll gains have since been revised slightly higher, and data published last week showed hiring rebound in May. Yet job growth is still down from the pace seen in March despite openings climbing further. Democrats have attributed the slowdown to a push for higher wages, while Republicans largely blame enhanced unemployment insurance.

The Tuesday JOLTS report showed fewer Americans competing for each opening. About 1.1 available workers existed for each open job, down from 1.2 in March. The reading compares to a pre-pandemic average of 0.8 and a crisis peak of 5.

A detailed look at April hiring and firing

Like the jobs report published on Friday, the JOLTS release includes more a granular look at which sectors thrived and which lagged, albeit one month behind the Bureau of Labor Statistics’ report.

The accommodations and food services sector added the most job openings throughout April, with a gain of 349,000 positions. The educational services sector shed 23,000 openings, setting the month’s largest decline.

Separations, which include layoffs and quits, jumped by 324,000 to 5.8 million.

Quits rose to a record-high 4 million from 3.6 million. Layoffs and discharges fell by 81,000 to 1.4 million, mirroring the downward trend in weekly jobless claims.

The US hiring rate held steady at 4.2%. That’s just above the pre-pandemic trend and suggests the labor shortage intensified through April.

The latest labor-market diagnosis

While the JOLTS report lends more detail to how the economy fared in April, Friday’s jobs report gave the most up-to-date look at the labor market’s performance. The US added 559,000 nonfarm payrolls last month, missing the median estimate of 674,000 jobs but improving significantly from the April pace.

The unemployment rate fell to 5.8% from 6.1%. The decline, powered by strong hiring and a slight drop in labor-force participation, beat the median estimate of 5.9%.

Economists largely viewed the report as a lukewarm print. “With unemployment benefits set to fade in the fall, we may be waiting until the end of summer before we see clear evidence of a fundamentally healing labor market,” Seema Shah, chief strategist at Principal Global Investors, said.

The Friday report also showed wages surging for a second consecutive month. Economists have looked to average hourly earnings for signs of whether labor shortages are merely overblown anecdotes or signs of a more widespread shift. Combined with the marked climb in openings through the spring, the strong upward pressure on wages backs up reports that Americans are holding off on returning to work.

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The massive jobs shortage will keep stronger inflation temporary, Goldman Sachs says

Job fair coronavirus
People seeking employment speak to recruiters at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • Stronger inflation will soon fade as millions of Americans rush back to work, Goldman Sachs said.
  • Labor supply will rebound as virus fears fade and enhanced unemployment benefits lapse, the bank said.
  • Ending the labor shortage should cool wage inflation, and price inflation will also likely be temporary, Goldman added.
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When it comes to the inflation debate looming over the US economy, Goldman Sachs is on the side of the Federal Reserve and the Biden administration.

Gauges of nationwide price growth are surging at their fastest rate in more than a decade, sparking concerns of an overheating economy ending the recovery early. Republicans and some moderate Democrats have blamed the Fed’s ultra-easy policy stance and unprecedented fiscal stimulus for the inflation overshoot. The Biden administration and the central bank have instead argued the stronger price growth is temporary and fade starting next year.

Goldman economists led by Jan Hatzius reiterated their stance on the Biden side on Monday, citing the latest jobs numbers as supporting evidence. The US added 559,000 nonfarm payrolls in May, missing the median estimate but still a sharp rebound from the dismal April report. Wages shot higher for a second straight month, signaling inflation was picking up in pay and pricing.

The combination of soaring wages and stronger inflation amplified Republicans’ claims of an overheating economy. Yet both pressures should cool in the coming months, Goldman said. For one, the economy is still down roughly 8 million payrolls, and May’s pace of job creation still places a full recovery more than a year into the future. Labor supply, which has been slowing hiring in recent months, should also “increase dramatically” as virus fears dim and enhanced unemployment insurance lapses. As more Americans return to work, wage growth is expected to slow.

Inflation should also cool on the pricing side, according to the bank. Goldman’s trimmed core Personal Consumption Expenditures (PCE) index – which excludes the 30% largest month-over-month price changes – has only risen 1.6% from the year-ago level. By comparison, standard PCE – among the most popular US inflation gauges – notched a 3.6% year-over-year gain in April. Core PCE strips out volatile food and energy prices and is generally viewed as a more reliable measure of long-term inflation.

The disparity reveals the “unprecedented role of outliers” in driving inflation higher, and such an effect should “have only limited effects on longer-term inflation expectations,” the economists said in a note to clients.

“Ultimately, the biggest question in the overheating debate remains whether US output and employment will rise sharply above potential in the next few years,” the team added. “If the answer is yes, then inflation could indeed climb to undesirable levels on a more permanent basis. But our answer continues to be no.”

The forecasts echo sentiments shared recently by central bank officials. Fed Governor Lael Brainard said last week that, as schools reopen and vaccinations continue, it’s likely that the labor shortage will unravel. Job openings sat at record highs by the end of March, and a matching of such huge demand with bolstered supply should drive “further progress on employment,” she added.

More broadly, Goldman expects GDP growth to slow after peaking in the second quarter and normalize as stimulus support lapses. The massive jobs shortfall makes for “significant slack” in the labor market, the bank said, adding that unemployment-based output should reach its maximum potential in late 2023.

Read the original article on Business Insider