The United States now has more job openings than ever in history

In another drastic reminder of how the pandemic has fundamentally distorted the job market, the number of open jobs hit a record 10.1 million in June, according to the latest monthly data from the Jobs Summary and of Labor Turnover from the Bureau of Labor Statistics. As the economy rebounds – even as the delta variant of the coronavirus spreads through poorly vaccinated areas of the United States – companies scramble to add more staff.

“It adds an exclamation point or two to the sense of urgency felt by employers,” said Mark Hamrick, chief financial analyst at Bankrate.

“The economy is reopening. Unfortunately, due to the imbalance between supply and demand, with the opening of so many businesses, demand has exploded, while supply will take longer to catch up, ”said Sam Stovall, chief strategist investments at CFRA Research.

The previous record of 9.3 million jobs was set two months earlier in April, and the June figure far exceeded average expectations of 9.1 million among economists polled by Dow Jones.

The number of people who quit their jobs – used by economists as a sort of proxy to gauge worker confidence – rose to 3.9 million in June, nearing the record 4 million set in April. Hires reached 6.7 million, against 5.9 million the previous month. Demand for workers was highest among employers in business and professional services, retail trade and hospitality – food and accommodation – business. At the regional level, the South has the most activity, with an increase in both the number of jobs and the number of people leaving their jobs.

On the other hand, layoffs reached a record high of 1.3 million. “It tells us that people who take a job stick with a job. It could be that more and more companies are raising wages in order to attract and retain their employees. If people earn a better pay, a living wage, then they’re more likely to stick with it, ”Stovall said.

Economists and market strategists characterize the data as a kind of dichotomy between good and bad news: demand for employees drives up wages, especially for lower-paid workers, and the backlog suggests high demand. of goods and services. will be able to support a continued recovery in the labor market. The BLS said on Friday that there were still 9.2 million people who fall under the Labor Department’s “U-6” category, which includes the unemployed as well as those working part-time who want a part-time job. full, as well as those of the ministry. is characterized as “marginally attached” to the labor force – a measure larger than the aggregate unemployment figure that many economists see as a better measure of labor market strength.

The downside to this sudden surge in demand for workers is that same pay rise, which hits businesses already struggling with higher input costs. While several specific niches – used cars are a vivid example – of goods have shocked consumers recently, economists say the inflationary pressures driving up prices are largely due to jumbled supply chains and to shortages of critical components that increase business spending. .

“We know the biggest irritants with inflation lately have been more related to supply constraints,” Hamrick said, although he added that these cost pressures could ease for some types. companies. “We are seeing dominoes falling… gasoline may have peaked, we have already reached that milestone with lumber.”

On the other hand, economists suspect that we have yet to see the full impact of rising wages on prices. “More hard components, as opposed to labor, are really factored into inflation,” said Aoifinn Devitt, chief investment officer at investment advisory firm Moneta. “In terms of the upward pressure on wages… I would say it hasn’t peaked yet,” she predicted. “I see it as pretty close to the top.”

“Recent data suggests that there is much less labor force than implied by the unemployment rate. If labor shortages persist, wages will be poised to rise further and even more public spending will serve as an additional accelerator, ”said Joseph LaVorgna, Managing Director and Chief Economist of the Americas at Natixis, in a research note. “It looks like a new labor market recovery is on the horizon. However, this may come with a risk of upward inflation, ”he said.

Some believe this is already happening. Jay Hatfield, portfolio manager at Infrastructure Capital Management, suggested that accommodative monetary policy and billions of dollars in fiscal stimulus have already pushed the economy into overheating, and the more than 10 million job openings at the end of June are proof of this. “The number of job vacancies is also exacerbated by additional pandemic unemployment programs which discourage return to work,” he said.

It’s a point of contention among labor economists and policymakers, some of whom argue that a shortage of child care services and a fear of the coronavirus are more influential factors keeping workers on the sidelines.

“I think for a lot of people the problem is that they can’t find appropriate child care. Maybe reopening schools next month will alleviate that concern a lot, ”Stovall said.

While optimistic, Stovall added that this suggests that any obstacle to fully reopening schools for in-person learning could jeopardize a return to normal for companies under pressure to fill jobs. As always, the coronavirus remains the biggest X factor. “If the delta variant causes more concern from school systems, parents … then I think the supply-demand curve will take longer to reach l ‘balance,’ he said.

In addition to keeping workers away for longer, a resurgent virus could have a ripple effect by distorting the demand for labor, said Nick Bunker, economist at Indeed.com. “If there is a slower return to in-person offices, it could slow down the progress of auxiliary jobs based on downtown business districts,” he said.

“There is the short-term concern about the delta variant. I think it’s possible that this wave of viruses is weighing on both the supply and demand for labor, ”Bunker said. “We could see a slowdown in this situation, as some people may be more reluctant to go to restaurants, go to large social gatherings or [patronize] other types of businesses that involve a lot of people together, ”he said.