Armed with displays of “Help Wanted” signs, employers continue their scramble to find willing and able workers to fill their depleted ranks. The vast array of signage and job postings illustrate the severity of the ongoing labor shortage.
Released each month by the Department of Labor, the Job Openings and Labor Turnover Survey, or JOLTS, reports the monthly change in job openings, hires, quits, layoffs and other employee separations. On Wednesday, the JOLTS for May was released. The survey reported that the number of job openings in America grew by 16,000 in May to 9.2 million, a new all-time high. In April, the number of job openings rose by 905,000. It was the fifth consecutive month the number of job openings increased. Over the past year, the number of job openings has risen by 69.1%.
The 9.2 million job openings nearly matches the 9.5 million unemployed Americans. So, given the proximity between these two numbers, why are we still seeing such a large amount of unemployed workers?
Despite the progress in the U.S. labor market over the past 14 months, the recent lack of downward momentum in the national unemployment rate conveys the labor market is not recovering at the speed it should be. In fact, the unemployment rate has actually increased in two of the past three months. Most recently, in June, the rate increased from 5.8% to 5.9%.
Wall Street has narrowed its focus to two main areas of concern. For many parents, pandemic-related school closures forced them to stay at home and care for a child. A second point of bearing is the additional $300 per week federal supplement to existing state unemployment benefits. Back in March, President Biden extended the federal supplement program for another six-month term, now set to expire on Sept. 6. Biden has yet to clarify if these federal supplements, which include the extra $300 per week payment, will be further extended.
Currently, 25 states have chosen to opt out of the federal program. Iowa Gov. Kim Reynolds ended the state’s participation effective June 12, though regular state benefits continue. Under Gov. JB Pritzker, Illinois still remains within the federal program.
The federal unemployment supplemental program remains a divisive subject. Advocates cite the extensive damage to the economy and labor market caused by government-mandated business closures and restrictions. During the COVID-19 lockdowns, economic growth cratered and the unemployment rate soared to 14.8% as more than 22.3 million Americans quickly lost their job.
Opponents, however, argue the additional federal benefits act as a disincentive for people to return to work. In many cases, people are now making the same money, or even more, by simply staying at home rather than returning to their job. In Illinois, for example, the state’s maximum weekly unemployment payment for an individual is $505. With the $300 federal supplement, the weekly payment jumps to $805. That’s equivalent to an annualized salary of $41,860.
Many economists and Wall Street analysts expect the labor shortage to improve, to some extent, later this fall. A return to normalcy for the back-to-school season should propel once home-bound parents back into the workforce. Also, for better or for worse, the federal supplement program is due to expire on Sept. 6. But until then, employers will be keeping their Help Wanted signs at the ready.
Mark Grywacheski is an expert in financial markets and economic analysis and is an investment adviser with Quad-Cities Investment Group, Davenport.
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