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Hot labor market and Great Retirement persist despite threat of recession


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Workers are still reaping the benefits of a hot labor market characterized by few layoffs, plenty of vacancies and high levels of voluntary departures, according to Data from the US Department of Labor was released on Wednesday.

The numbers show that the pandemic-era trend known as the Great Retirement is still in full swing despite fears of a U.S. recession, although it is showing some signs of leveling off, labor economists said.

“Overall, it doesn’t look like the job market is about to enter a recession,” said Daniel Zhao, senior economist at job site Glassdoor. “The demand for labor is still extremely high, and even when things are cooling down to the white, they are still red hot.

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“I think the question on everyone’s mind is whether it will continue,” Zhao added.

The number of vacancies and layoffs is almost record high

A Help Wanted sign in Patchogue, New York on August 24, 2021.

Steve Pfost/Newsday RM via Getty Images

The Ministry of Labor reported on Wednesday that 11.3 million job vacancies were opened on the last working day of May.

The number of job openings — a measure of employer demand for labor — fell from 11.7 million in April and a record 11.9 million in March. But they are still elevated in historical terms and are hovering around the level of the end of 2021.

In addition, workers were quitting their jobs at an almost record-breaking rate. About 4.3 million people left their jobs voluntarily in May, about the same as the previous month and only slightly below the peak of more than 4.4 million in March.

The historically low level of layoffs continues

Layoffs were also near record lows in May. The jobless rate — which measures layoffs during the month as a percentage of total employment — was unchanged at 0.9% in May, the Labor Department said on Wednesday.

Before the pandemic, 1.1% was the lowest unemployment rate in the country. But May marked the 15th straight month in which layoffs were below the pre-pandemic record — a sign that employers are holding on to their existing workers, Bunker said.

It’s still a job market for job seekers. Workers still have a lot of bargaining power.

Nick Bunker

economist at Indeed

At the same time, the unemployment rate of 3.6% is close to the pre-pandemic level of 3.5% in early 2020. This is the lowest unemployment rate since 1969.

“It’s still a job market for job seekers,” Bunker said. “Workers still have a lot of bargaining power.

“Maybe they’ve lost a little bit of leverage compared to a couple of months ago, but we’re not seeing much change yet.”

A slowdown may be ahead

While the labor market has been a bright spot in the pandemic-era economic recovery, there are signs things may be cooling down — though it’s unclear how much or how quickly, economists say.

The Federal Reserve is raising borrowing costs for consumers and businesses to slow the economy and curb stubbornly high inflation. Moreover, the latest inflation numbers came in hotter than expected and the latest retail sales data was weaker than expected, Glassdoor’s Zhao said.

“We know quite clearly that the Federal Reserve is trying to cool the economy,” Zhao said. “One of the places that will happen is the labor market.

“As the job market cools, things may slow down, but for now we’re still in the Great Retirement,” he added.

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