Tuesday, December 17, 2019

Just Not Enough Workers

The October Job Openings and Labor Turnover Survey (JOLTS) released today reported a 235,000 increase in job openings to 7.3 million. The survey continues to show the economy is functioning at a level with more job openings than unemployed individuals. This can be seen in the following two charts with the first one showing only .81 unemployed workers available per job opening. The second chart shows the number of unemployed individuals (5.8 million versus the total job openings (7.3 million.)

The strong labor market is drawing individuals back into the labor force who previously were classified as not in the labor force. This is resulting in the participation rate slowly increasing and now stands at 63.2% where it equaled 66.1% prior to the financial crisis.

The one question that arises given the low unemployment rate is whether or not there are enough qualified individuals to fill the current level of job openings. The number of individuals 'not in the labor force but want a job' is nearing the level reach prior to the financial crisis. The number of unemployed individuals is now below the pre-financial crisis low.

A positive that results from the tight labor market is real average hourly earnings are beginning to experience increases that were last seen in the mid 1990's and even nearing pre-financial crisis levels. The potential upward pressure on inflation is something that will be at the forefront of Federal Reserve officials though

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