The US has seen an incredible increase in labor demand amid the lifting of quarantine measures. The number of vacancies in May reached a record 9.21 million, but at the same time in June 9.5 million people were officially unemployed. When can we expect a recovery in the US labor market?
Currently, a weak labor market is slowing the economic recovery in the United States. The number of unemployed people in the country officially stood at 9.5 million in June, although Americans are increasingly filing for benefits.
Schedule of the decline in the number of weekly jobless claims in the United States starting January 1, 2020. Image source: tradingeconomics.
At the same time, over the past three months in a row, the number of new available jobs in the United States has grown significantly, although the economy has not yet fully recovered more than 22 thousand jobs lost during the pandemic.
Statistics graph of monthly US non-farm new job additions since January 2019. Image source: tradingeconomics.
Based on these statistics and the fact that over 155 million Americans have been fully vaccinated against the coronavirus,
one might conclude that the labor market must show strength and recovery.
However, the problem is that the US labor market is far from supply-demand balance. While the demand for labor is strong (as shown by the graph of US national agencies below), Americans are in no hurry to find jobs.
The blue line in the graph below the percentage increase in employers’ reports of difficulties in filling vacancies, the purple line is the increase in the number of unemployed in the United States.
In particular, staff drain and staff shortages are reported in the restaurant and hospitality industry. According to the US Bureau of Labor Statistics, in May, the percentage of layoffs from these areas reached a record level of 80%. This is forcing employers to raise wages – some economists have already calculated that the United States will see the largest wage increases in the past few years.
Market analysts and economists in general see three main reasons for labor shortages:
these are high unemployment payments (their deadlines end in September) – with unchanged wages, Americans lose the incentive to go to low-paid jobs;
holidays in schools and universities – due to the high cost of childcare, many women are left without work at home;
many Americans have retired.
Some add to this list the motive in the form of health recovery after suffering COVID-19, but there are no official statistics for this population group.
The opinions of most experts boil down to the fact that significant improvements in the US labor market should not be expected earlier than September.