The U.S. job market has lots of openings, but not for lack of effort in trying to fill them.
According to the latest numbers from the Job Openings and Labor Turnover Survey (JOLTS, for short), released monthly by the Labor Department, job openings are at a record high, yet would-be employers are finding it tough to snag qualified workers to fill those roles.
Reuters reported that the data, which debuted on Wednesday (Sept. 7), shows that tightening in the job market itself may lead to wage growth. The newswire stated that the JOLTS report has a place among the job market data and analysis that Federal Reserve Chair Janet Yellen keeps on a “dashboard” to monitor the economy, and the latest report comes less than two weeks before the start of the Fed’s Sept. 20–21 policy meeting. Conventional wisdom holds that the central bank will leave rates unchanged this month.
As for the headline numbers themselves: The total number of job openings grew by 228,000 to a seasonally adjusted 5.9 million, and that tally is the highest number since JOLTS began tracking that data in late 2000. The hiring pace itself, said Reuters, was relatively unchanged at about 5.2 million in July. Hiring also slowed in August, which means that the gap remains in place between jobs that go wanting and jobs that get filled. As has been widely reported, the non-farm payrolls number for August showed gains of about 151,000, far below the pace of the previous two months, which added a cumulative total of 546,000 jobs (for an average of 273,000 hires per month).
As for what companies can do in the wake of such an imbalance, where job openings remain stubbornly high, the options may be binary. In an interview with Reuters, John Ryding, chief economist at RDQ Economics, said that the data suggests “wages should be pressured higher, and therefore, either price increases will pick up or profit margins will be squeezed further.” It may be time for wages to be on the upswing, as growth has been below 3 percent over the past several months (as measured on a year-over-year basis). The newswire said that a wage boost of 3–3.5 percent would be needed to move overall inflation toward the 2 percent target rate that has been advocated by the Fed. The conundrum, as we here at PYMNTS see it: If wages increase, inflation increases and the Fed raises rates … what happens next?