The U.S. economy shrank during the first half of the year as consumer sentiment plummeted with rumors of high inflation and turmoil abroad. There were also a few big corporate names that slashed thousands of jobs but the U.S. job market did not miss a beat. U.S. employers announced only 20,485 layoffs in August, the lowest year-to-date total since 1993, according to data released Thursday by outplacement company Challenger, Gray & Christmas.
A separate report by the Department of Labor showed initial unemployment claims fell to 232,000 in the week ended Aug. 27, down 5,000 from the prior weeks levels, revised down by 6,000 claims. Initial claims are now at the lowest point in two months.
Recent job data, including Julys jobs report and a job-turnover survey, also defied analysts and economists expectations that the job market would cool off as it drew closer to a recovery from the pandemic and the Fed took extraordinary measures to suppress inflation and suppress demand. In July, employment growth was expected to slow to about 250,000 jobs, and the number of unfilled positions fell to 10.5 million. Instead, 528,000 jobs were added, with available jobs rising to 11.2 million.
“The job market is not only running hot, but like a fiery inferno, said Meghan Green, global chief economist for the Kroll Institute and a senior research scientist at Brown University. The hot job market makes matters more complicated for the Federal Reserve, which sees the current two-jobs-openings-per-job-seeker ratio as a potential driving force behind higher wages, which could, in turn, drive up prices and continue the rise in inflation.
The Minneapolis Fed found, after polling 444 members in six states, that a majority of respondents said they planned to keep hiring over the next six months, 10% said they were cutting back, and those holding steady expressed anxiety over whether they could retain the workers they had. Businesses in states like Maryland, Virginia, and North Carolina are also closely monitoring their workforce levels, according to data from the Richmond Fed – but very few are making cuts, said R. Andrew Bauer, VP and district manager, on a recent podcast. “What they are probably doing is, should there be an opening, they are going to slow down on filling the position, anticipating what might happen,” he said.
There are a few systemic challenges in closing the gap on labor shortages. The labor force is a bit smaller than pre-pandemic levels, and labor force participation has been declining since the early 2000s, when it was about 67%, dropping to slightly over 62% as of July. Economists had expected that the rate would rise as the economy added jobs again; yet, this year, it has actually fallen.
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I joined the HR industry in 2004 after working as a sales leader in the Financial Services Industry for eight years. After spending his first couple of years in HR trying to fit in, I found my voice. Now I leverage all of the things I once hated about HR to become a consultant and invaluable partner to the businesses I support. I contribute to the HRGazzette and to DataDrivenInvestor on Medium. WARNING: my writing style is raw and in your face, not what you would expect from an HR executive.
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