Policymakers are debating how to entice workers back into the labor force. This is a serious issue as employers report difficulties finding candidates to hire.
A Google news search for hiring reveals hundreds of articles related to the problem. Typical is a story from Cincinnati headlined: “Despite large hiring fairs, potential workers still aren’t biting.” Discussions with local business owners, no matter where you live, include similar tales.
But data shows employers are hiring more people than they have since 2000.
Hiring Rate on the Decline Again
The chart above shows the hire rate — the number of hires during the entire month as a percent of total employment. At 4.3%, the rate is well above its pre-pandemic levels.
The Bureau of Labor Statistics report this information every month in the Job Openings and Labor Turnover report. In August, businesses hired 6.3 million employees. These employees helped fill vacancies, but most were simply replacing employees who quit their jobs.
Employers Struggle to Fill Positions as Employees Leave for Better Opportunities
In August, 4.3 million Americans quit their job. Hotels and restaurants suffered the most with 892,000 quits in that sector. Retailers also experienced high turnover with 721,000 employees leaving during the month. Over half a million quit jobs in health care.
During the pandemic, these were often considered essential workers, and many worked long hours and dealt with the illnesses of their families and friends. Now that the economy is improving, they are seeking better opportunities.
Employees are quitting because so many other employers are hiring. Businesses that have provided unpredictable schedules and low wages are now struggling to keep workers.
This is good news for employees who struggled with those conditions for years. But it is bad news for consumers who relied on those employees.
One solution is higher wages. That can lead to higher inflation. Many workers will fall behind even as their paychecks increase. This is really a problem that defies simple solutions. Fortunately, Congress is looking at what they can do.
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Michael Carr is the editor of One Trade, Peak Velocity Trader and Precision Profits. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.