Every month, the unemployment statistics are watched closely by the financial markets, the news media and the Federal Reserve. It’s the Fed’s mandate to keep inflation low and labor participation high. And recent statements from the Fed show they think the economy is moving in the right direction, absent potential setbacks from COVID-19 variants.
The latest unemployment report, released on September 1st, showed a disappointing growth in new jobs, despite the unemployment rate falling to 5.2%. The general consensus is that the Delta variant slowed both the economy and job growth in August. But everything is relative, and there is also some good news.
New weekly claims for unemployment are far below their peaks, set in spring 2020 — currently “only” about 350,000 in a recent week, about half the levels of a year ago. And as extra and extended federal unemployment benefits have come to an end, millions more people should be willing to take the jobs that are currently going begging in areas related to travel, leisure and dining out.
The ending of benefits is expected to create a surge of job-seekers, and reduce the headline unemployment numbers. Yet recent Labor department research has showed that the states that cut benefits early have experienced job growth similar to — and perhaps slightly slower than — growth in states that retained the benefits.
Of course, some people sailed through the pandemic. Their high-paying jobs allowed working remotely, sometimes in far more pleasant places than their office environment. They often set their own hours, spent no time commuting and spent 50% less on clothes, since they were only dressing from the waist up for Zoom meetings!
That’s not to say that everyone enjoyed working from home — especially the families with two working parents who were trying to manage work obligations and remote schooling situations for their children. The latest jobs report showed that many single parents stayed out of the workforce over uncertainty about whether it was safe for their children to return to school. Hopefully, those days are behind us.
Labor Talent Wars
In fact, as we celebrate this Labor Day, it appears that the balance of power has turned for much of the American workforce. Employers will likely be forced to offer higher wages and more flexible work conditions — even after the pandemic passes into history.
Over the past 18 months, many have decided that work should be less of a priority in life. A significant number have retired early — and don’t plan to return to the workforce. Those who do have jobs have new attitudes.
A Prudential Financial survey of American workers who were employed full time showed that two-thirds preferred a flexible, hybrid workplace set up. And, according to the survey, 42% of current remote workers said if their current company does not continue to offer remote work options long term, they will look for a job at a company that does.
Even more startling, the survey showed that one in four American workers — those who already had a job and worked through the pandemic — were considering leaving their jobs for positions with more pay, more opportunity and more flexibility.
So, while nearly 9 million Americans are still collecting unemployment benefits on Labor Day, millions more are becoming more demanding of their employers. And those employers may find themselves competing in a pricy talent war.
Making Your Move
Every commodity market has its cycles, and timing those cycles is important, whether you’re trading real estate or lumber, soybeans or copper — or jobs. And it’s critically important to understand where you are in the cycle before making your move.
The current demand cycle for labor won’t last forever. So whether you’re asking for more pay or more flexibility at your current job, or are in the midst of a search for a job with more opportunity, the time to make your move is now.
Technology is bringing new efficiencies to the workplace, requiring fewer people, whether it be the assembly lines in factories or the front-counter order system in any McDonald’s. The help wanted signs won’t always be in every window, so it’s important to choose a job with a future, or one that offers training, while you are in demand.
For those opting out of the workforce temporarily, there will be a day of reckoning. While generous benefits may offset the loss of current paychecks, those retirement plan contributions that you’re not making now will dent your lifestyle in 30 or 40 years — when benefits may not be so generous for the elderly poor.
This is the time to review your long-term perspective on work and savings, along with your current emotions. And that’s The Savage Truth.