Here are the signs the job market is hot for workers


A “Now Hiring” advertisement in a store window in Bay Shore, New York, on March 24, 2022.

Steve Pfost/Newsday RM via Getty Images

Unemployment insurance claims last week fell to their lowest level in more than 50 years – another sign that workers are reaping the benefits of a booming job market.

Americans filed 166,000 initial claims for unemployment benefits in the week ended April 2, the Labor Department said Thursday. Initial claims are an approximation of layoffs.

The figure is a pandemic-era low. It also ties almost the all-time low.

The Labor Department began tracking unemployment claims in 1967. Since then, only one other week in history has seen fewer claims for benefits: 162,000 in November 1968.

However, today’s labor force is more than double its size in 1968 (about 79 million people versus 164 million), making last week’s milestone remarkable on a proportional basis.

“Employers seem to be holding on very tightly to their workers, as the latest look at new jobless claims shows,” said Mark Hamrick, senior economics analyst at Bankrate.

Other federal data also points to a strong job market for workers.

Job postings and the number of people voluntarily quitting their jobs each remain near record highs set at the end of 2021.

Many left their jobs for other opportunities amid high labor demand and a big pay rise. Annual wage growth has been higher than at any time in more than 20 years, according to economists at job site Indeed, as employers compete for talent.

The rate at which companies are laying off workers is also near an all-time high as companies try to retain staff.

The national unemployment rate – 3.6% in March – is also approaching historic lows. It fell near the pre-pandemic rate of 3.5% in February 2020, which was the lowest unemployment rate since December 1969.

Workers on the fringes have been joining the workforce at a rapid pace in recent months, according to Jim Baird, chief investment officer at Plante Moran Financial Advisors.

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More than 2.1 million workers have returned in the past three months alone, providing a “new pool of available workers to fuel continued job creation”, he said.

“Labour demand remains strong and layoffs are expected to remain low as employers struggle to fill near-record openings,” Baird added.

While the U.S. economy has yet to fully recoup the 22 million jobs lost in the early months of the pandemic, the rapid pace of job creation puts the country on a path to recoup them in June ( if the current trend continues).

Headwinds

However, some headwinds can have a moderating effect on the labor market.

The Federal Reserve, the central bank of the United States, began a cycle of raising its benchmark interest rate in March to cool the economy and curb inflation. Higher rates make it more expensive for consumers and businesses to borrow money.

And inflation, which is at its highest level in 40 years, is driving up the prices of goods and services across the economy. The average person has seen rising costs eclipse their wage growth, eroding their purchasing power. (This is not true for all workers, however, such as non-supervisory workers in bars and restaurants, whose wage growth has risen faster than inflation.)

Treasury Secretary Janet Yellen also warned on Wednesday that Russia’s attack on Ukraine “will have enormous economic repercussions for the world.”

These challenges will test households and businesses in the months to come, Hamrick said.

“This [unemployment] claims remain so low at a time of such turmoil suggests that, for now at least, the economy is resilient in the face of soaring crude oil, gasoline and other prices,” Hamrick said. “How long this can persist remains to be seen.”


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