US Labor Market: Help Wanted!
As we enter the holiday season stock owners have been the big losers of 2022, but jobs are still plentiful and nominal wages are rising rapidly. The Wall Street Journal reports “Stiff Demand Drives Gains in Jobs, Wages” (December 4). Faced with a stagnant stock market, nothing bolsters confidence more than the plethora of job openings, seemingly everywhere, and for all types of jobs.
The number of job openings is a statistic worth paying attention to as a gauge of the overall economy, but certainly not the only one. Here we examine it in relation to economic conditions and other statistics. This reveals some good, some bad, and some ugly insights into the economy, but overall, the signs all point to the business cycle and the turn toward economic crisis.
Let’s start with the overall unemployment rate, which is now below 4 percent, or about the same as the bubble low of the last business cycle in late 2019 and at the apex of the Tech Bubble of the late 1990s but did not drop that low during the Housing Bubble. The prior expansion was very long, and the recession of 2020 was the shortest on record, with most establishment economists considering it a covid phenomenon, rather than a true macroeconomic bust saved only by massive levels of governmental and Fed tampering interventions.
While politicians and Mainstream economists would like to think this sub–4 percent rate is “full employment” or the “natural rate” of unemployment, Austrian economists tend to view this level as the downward turning point in the boom-bust cycle and a harbinger of possible economic crisis.
Forward looking, the total number of job openings in the economy is more than 10 million for a labor force of 165 million. The recent peak of almost 12 million job openings dwarfs the previous historical peak of nearly 7.5 million in 2019. That was a record going all the way back to the beginning of the data series in 2000 and 50 percent higher than the tech- and housing-bubble peaks. These periods can be labelled “almost too good to be true.” For my part, I was on the lookout for another bust/crash/crisis going into 2020.
The labor force participation rate is of great concern to government economists. It reflects the number of eligible adults working or looking for work and that number is now hovering around 62 percent. During the 1990s it hit an historic peak above 67 percent. The “missing” 5 percent of the curren
Article from Mises Wire