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Workers are still reaping the benefits of a hot job market characterized by few layoffs, many job openings and high levels of voluntary departures, according to data from the US Department of Labor released Wednesday.
The numbers show that the pandemic-era trend known as the Great Resignation is still in full swing despite fears of a recession in the US, though it shows some signs of leveling off, labor economists say.
“Overall, this doesn’t look like a job market that’s on the brink of recession,” said Daniel Zhao, senior economist at career site Glassdoor. “The labor demand is still extremely hot, and even if things cool off from white-hot, they’re still piping hot.
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“However, I think the question is on everyone’s mind whether this will continue,” Zhao added.
Vacancies and ‘stops’ near record highs
A “Help Wanted” sign in Patchogue, New York, on August 24, 2021.
Steve Pfost/Newsday RM via Getty Images
On the last working day of May, there were almost 11.3 million vacancies, the Ministry of Labor reported on Wednesday.
The number of job openings – an indicator of employers’ demand for labor – has fallen from around 11.7 million in April and a record 11.9 million in March. But they are still high historically, hovering around late 2021 levels.
In addition, employees have quit their jobs at near record speed. About 4.3 million people left their jobs voluntarily in May, about the same as in the previous month and only slightly less than their peak of more than 4.4 million in March.
“The quit percentage was 100 [miles per hour] on the highway; it slowed down, but it’s still doing 90,” said Nick Bunker, an economist at job site Indeed. “It’s still pretty fast, just not as fast as it was.”
This Great Resignation trend has been at the center of the labor market since early 2021. It has even entered the zeitgeist via so-called “QuitToks” on social media site TikTok and in a Beyonce song released last month.
For the most part, according to economists, workers are shifting to better jobs, lured by factors such as higher wages. Wages rose 6.1% in May from a year earlier, the largest annual increase in more than 25 years, according to the Federal Reserve Bank of Atlanta.
Historically low redundancy rates persist
Layoffs were also at an all-time low in May. The layoff rate — which measures the number of layoffs during the month as a percentage of total employment — remained unchanged at 0.9% in May, the Labor Department said Wednesday.
Before the pandemic, 1.1% was the lowest layoff rate in the country. But May marked the 15th straight month in which the number of layoffs fell below that pre-pandemic record — an indication that employers are holding onto their existing employees, Bunker said.
Meanwhile, the unemployment rate of 3.6% is near the pre-pandemic level of early 2020, when it was 3.5%. That was the lowest unemployment rate since 1969.
“It’s still a job market for job seekers,” says Bunker. “Employees still have a lot of bargaining power.
“They may have lost a little bit of influence from a few months ago, but we haven’t seen a significant change there yet.”
Delay may be ahead
While the labor market has been a ray of hope in the economic recovery from the pandemic era, there is evidence that things may cool down — though it’s unclear how much and how quickly, economists said.
The Federal Reserve is raising borrowing costs for consumers and businesses to slow the economy and contain stubbornly high inflation. In addition, the latest inflation reading came in higher than expected and the latest retail sales data was weaker than expected, Glassdoor’s Zhao said.
“We know very explicitly that the Federal Reserve is trying to cool the economy,” Zhao said. “One of the places that will happen is in the job market.
“Things may slow down as the job market cools, but at the moment we are still very much in the Great Resignation,” he added.