COLORADO SPRINGS — With new jobs added in March and the unemployment fee dropping, why is each employer survey exhibiting employers are still starved for labor?
In accordance to PhD economist Tatiana Bailey, the U.S. added 431,000 new jobs in March, bringing the unemployment fee down to 3.3%, which is effectively under what most economists think about to be the pure fee of unemployment, round 4 and 4.5%. The disconnect, nevertheless, could also be attributed to the massive hole between what number of jobs can be found vs. how many individuals are searching for work.
There are roughly 11.3 million job openings within the U.S. but solely about 6 million unemployed individuals. That works out to roughly 5.3 million extra job openings than unemployed individuals in U.S.
One other facet is the quantity of people that select not to work, both due to extra financial savings or different extenuating circumstances corresponding to the continuing threat of Covid-19, or being underneath or over-qualified.
In March, the labor participation fee was 62%. In comparison to March of 2019, when labor participation was 63%, it doesn’t appear to be an impactful distinction, but it equates to 1.6 million workers.
Even when all these workers got here again into the labor pressure, the U.S. would still be brief about 4.4 million workers. This boils down to one easy reality– there simply aren’t sufficient eligible workers to fill all of the accessible jobs.
“Now the other thing to remember is what I consider to be the true labor participation rate, and those are working age people 16 to 64. Well that labor participation rate is at 76 and that is exactly the same as it was in March of 2019. So really that tells me that it isn’t the young working age people who are the blame for the labor shortages that we are having in the U.S. right now,” mentioned Bailey.
What do all these statistics boil down to? Sadly Bailey believes the demographics are working in opposition to us. “It also tells me this headwind is probably a major factor in my own calculus in terms of the probability of the ‘R-word’– a recession in the next six to 12 months.”