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MARK-TO-MARKET: America’s Great Resignation continues
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MARK-TO-MARKET: America’s Great Resignation continues

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Without question, the U.S. labor market has made significant gains since the initial chaos of the COVID pandemic. In April 2020, the national unemployment rate surged from 3.5% to 14.8% as 22.3 million Americans suddenly lost their jobs. Today, the unemployment rate stands at 3.9%.

Many facets of our economy have since recaptured their pre-pandemic level of output. However, the labor market has stubbornly fallen short and has yet to recover 3.57 million lost jobs. The nation’s labor participation rate – the percentage of Americans working or actively looking for work – remains mired at a 45-year low.

On Tuesday, the Department of Labor’s monthly Job Openings and Labor Turnover Survey (JOLTS) reported there are 10.56 million unfilled job openings across the nation. This is slightly below the all-time record high of 11.1 million reported in July. The JOLTS reports the monthly change in job openings, hires, quits, layoffs and other employee separations. Currently, there are 4.3 million more unfilled job openings than there are unemployed Americans.

Of the 11 sectors within the economy, Educational & Health Services has the most job openings with 1.97 million. Rounding out the Top 5 are Trade, Transportation & Utilities (1.96 million), Professional & Business Services (1.8 million), Leisure & Hospitality (1.48 million) and Government (962,000). Combined, these five sectors account for 77% of all job openings across the nation.

A vexing aspect of the labor shortage is the persistent number of workers quitting their job. Dubbed the Great Resignation, a record 21.3 million employees quit their job over the past five months. In November, a record-high 4.53 million Americans quit their job, equating to roughly 3% of America’s total workforce. This was an 8.9% increase from the 4.46 million quits in October. November was the fifth consecutive month where the number of quits exceeded four million.

In November, Leisure & Hospitality led all sectors with more than one million workers quitting their job. This sector includes bars, restaurants, hotels, casinos and theaters, among others. A close second Trade, Transportation & Utilities which reported 996,000 quits.

A number of theories abound on the factors behind the Great Resignation. Generous government benefits, concerns over COVID and workers opting for early retirement have all played a definitive role.

But most indicators point to the internal dynamics of the labor shortage itself. In their quest to attract workers to fill their open job postings, employers are increasingly forced to raise wages, offer signing bonuses and provide flexible work schedules. The unintended consequence is that workers are now jumping from one job to the next in search of incrementally higher wages and signing bonuses. This is especially evident in low-wage employees in the Leisure & Hospitality sector. The end result is a self-fulfilling spiral of workers chasing – and then leaving – one job for the next.

Mark Grywacheski is an expert in financial markets and economic analysis and is an investment adviser with Quad-Cities Investment Group, Davenport.

Disclaimer: Opinions expressed herein are subject to change without notice. Any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. Information has been obtained from sources considered reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned. Quad-Cities Investment Group LLC is a registered investment adviser with the U.S. Securities Exchange Commission.


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