It’s the first time on record that the number of available jobs has exceeded the number of unemployed workers in the United States. The number of jobs available in April rose to 6.7 million, or one job for every 0.95 jobless workers. Compare this to 2009, during the Great Recession, when there were 6.7 unemployed workers for every available job. The unemployment rate of 3.8% is the lowest it’s been since December 1969.
Unemployment this low is typically accompanied by significant wage gains, which is not really the case this time. We are seeing modest gains — 2.8% in May on average for all non-management workers — but that’s a small increase compared to the near 4% wage growth the last time we had similar unemployment. What gives? It may be that older and more experienced workers are leaving the workforce, being replaced by a younger generation of newer, greener employees. Data indicates that workers are not hesitating to leave their jobs, which suggests that people are confident about finding better opportunities.
It’s great to see unemployment figures so low, but it also indicates the possibility of inflation on the horizon (though maybe slightly less likely with the low wage growth). The Federal Reserve raised the federal funds rate in March and June of this year already, and we may be looking at additional future rate hikes to curb the inflationary pressure of low unemployment.
Source: “Milestone for U.S. job market: more openings than unemployed” by Christopher Rugaber; Ledger-Enquirer: June 5, 2018