Job Openings Set Another Record High in July
Job openings jumped to 6.170 million in July, a new record high. The country is starting to see a dangerous level of job openings (if it isn’t already there). And, with hurricanes Harvey and Irma hitting different geographic regions in the country, we might see a significant increase in job openings when the data is released for September (release of data will be in November).
There are three primary reasons why job openings are this high. First, there are a significant number of jobs available that people just don’t want. Many physical labor positions struggle to find enough people (primarily farming and crop harvesting). Retail and fast food are also struggling to find enough workers.
Second, there are many job openings that don’t have enough qualified applicants. Trouble spots have included trucking, manufacturing, construction, health care, engineering, computer science, etc. This will continue to be a problem as the cost of college education rises and individuals opt for short-cuts and alternative forms of education.
One of our friends posted a note on the Missouri Accountants Discussion Forum about a survey in which accountants said that their greatest challenges was finding qualified talent. It’s a chronic problem across many industries as mentioned.
Third, people are staying home to take care of older parents and family members. Some families are taking on a strategy where a set of parents have made enough money over their lifetimes that they can afford to have a child stay at home to care for them – instead of having them go to a retirement community. Children (both married and single) have opted to pool resources together among households to provide this retirement care for their parents. These people probably don’t show up in any of the unemployment figures (they would show up in the participation rate – which is still pretty low). But, many of these people had long careers and occupied skilled jobs that now are creating vacancies as they opt to drop out of the workforce.
Impact: one of the perplexing things we don’t see happening in response to this record number of job openings is a hike in wages. Wages just aren’t responding yet to this trend. One would think that we would be seeing record wage hikes along with record job openings. Automation could be part of the problem.
What we may be seeing (at a macro level), is that there are just as many jobs being automated as quickly as we have job openings show up in other markets. When the Department of Labor collects macro industry data, we are seeing a blended rate that hovers around 2.5% in y/y growth (despite us hearing that some industries are paying 20-50% more to hire qualified workers in some industries). Collectively across the US, it all averages out to a growth rate that hovers just slightly ahead of inflation.
Immigration control could also make this number worse. Many of the various proposed immigration actions have provisions in them to help protect the most skilled workers – to allow them to continue to come into the United States. But, some hourly wage occupations are feeling extreme shortages, and many of those jobs will get filled by workers from abroad.