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Axios AM Deep Dive: Inside the jobs Bonanza

National

Data: U.S. Bureau of Labor Statistics, FRED; Chart: Will Chase/Axios

The unprecedented upheaval of a year-plus of pandemic life is playing out in the job market. 

Why it matters: The unemployment rate remains stubbornly high. At the same time, the Great Resignation has companies across the country trying desperately to hold on to staff as employees act on pent-up demand for job changes. 

The pandemic also led some people to relocate, and to rethink their careers and what they want out of life — contributing to a mismatch of available jobs to available workers. 

By the numbers: There are 6.7 million fewer Americans working now than there were before the pandemic. The unemployment rate is 5.9%, compared to 3.5% in February 2020. On the plus side, about 16 million net jobs have been filled since April 2020. 

Four metrics from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey help paint the picture. 

Job openings are at a record high of 9.2 million.

For every one opening, there is one unemployed American. This is a considerable improvement from April 2020 when there were five unemployed per opening. 

In response, businesses across all industries have been raising wages. A growing percentage of companies are advertising hiring incentives like cash signing bonuses.

Hirings aren't even close to keeping pace with new job openings.

In May, the ratio of hires to job openings fell to an all-time low of 0.64.

Numerous factors are holding workers back, including concerns about the coronavirus, child care issues, comfortable financial safety nets, and the enhanced unemployment benefits that are currently rolling off on a state-by-state basis. 

There are also an estimated 1.7 million people who retired early during the pandemic.

Layoffs and firings are at an all-time low. 

The more that companies struggle to hire, the less they are letting go of the workers they do have. 

In fact, it may be the case that workers are underestimating how much leverage they have with their employers.

Quits are at record highs as workers seek out better opportunities. 

The share of departing workers (layoffs, firings, retirements, deaths) who quit is 67.8%, the second-highest ever.

Quit rates are particularly high in lower-wage service jobs like those in the leisure and hospitality industries, which likely reflects some trading up to better positions. 

Between the lines: This optimism toward the labor market may seem to be in conflict with the fact that 9.5 million Americans identify as being unemployed.

Federal Reserve Chair Jerome Powell addressed the topic during a press conference on Wednesday. Few people follow the labor market as closely as Powell, since one of the Fed's jobs is to help the economy achieve maximum employment.

He said the real-world process for securing a job is a "time intensive, labor intensive process, and there may be a bit of a speed limit on that."

The big picture:  The balance of power in the labor market is unusually slanted in favor of workers, who are asking for raises, who are getting poached by competitors, who are switching careers, and in many cases who are just leaving the labor force altogether.

The bottom line: The labor market wouldn’t be this favorable for workers if not for an economy that’s growing at such a high clip that there are shortages. As companies increasingly hire and continue to raise wages, that’s more money in the pockets of consumers who can spend it, perpetuating a virtuous cycle of economic growth.

1. 1 big thing: The worker's job market

The balance of power in the labor market is unusually slanted in favor of workers.

Jobs

The unprecedented upheaval of a year-plus of pandemic life is playing out in the job market. Why it matters: The unemployment rate remains stubbornly high. At the same time, the <a class="gtmContentClick" data-vars-link-text="Great Resignation" data-vars-click-url="https://www.axios.com/resignations-companies-e279fcfc-c8e7-4955-8a9b-47562490ee55.html" data-vars-content-id="62461df6-116c-4b0c-8c8d-b0a22e53f7ba" data-vars-headline="1 big thing: The worker&#x27;s job market" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/resignations-companies-e279fcfc-c8e7-4955-8a9b-47562490ee55.html" target="_self">Great Resignation</a> has companies across the country trying desperately to hold on to staff as employees act on pent-up demand for job changes.

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Finish Line

Axios Finish Line

Some job seekers are taking their time...

"There were endless amounts of roles. I could be extremely picky." 

Ashley Taylor, who works in software sales. 

Taylor left her last job in January and within two days had an offer to join another startup. She waited six months and ended up getting an even higher offer from the same company.

"I haven’t even been able to get the jobs that I don’t want. And that's with five years of college."  

Gaeble King, an attendant at a county park in Washington who's looking to advance in his field and work as an environmental geologist. 

Parks have gained popularity during the pandemic, and there's an abundance of open roles, but "they want to hire people that they don't necessarily have to train," says King. And getting that training himself would require going back to school and accruing more debt. 

"We have people that will flat out tell you they don't want a job. They say their unemployment has not run out, and they don’t want to go back to work until that does run out."

Kim Whitworth, who runs an Express Employment staffing agency that connects workers to employers in Decatur, Alabama. 

Whitworth's agency has around 170 open jobs in manufacturing, warehousing, IT and other industries. In normal times, a firm her size has about 30 roles to fill, she says.

The average pay for the open roles in $15 an hour, and they come with benefits. "But yesterday we sent out 600 texts for positions, and we got four responses," she noted.

2. View from the labor market trenches

Employees and companies face different realities in today's jobs market.

Photo collage of a laptop, briefcase, pens and pencils.

Employment

Some job seekers are taking their time...<blockquote>&quot;There were endless amounts of roles. I could be extremely picky.&quot; </blockquote><cite>— Ashley Taylor, who works in software sales. </cite><ul><li>Taylor left her last job in January and within two days had an offer to join another startup. She waited six months and ended up getting an even higher offer from the same company.</li></ul>

Macro

Axios Macro

States cutting $300 weekly unemployment benefits

Data: Axios research; Cartogram: Axios Visuals

More than half of states are embarking on a grand experiment: prematurely ending enhanced unemployment benefits in order to spur people back to work. 

What's happening: Despite the uproar over the higher payouts, early evidence suggests canceling them only marginally helped employers find workers — that is, if there was any effect at all.

State-level data analyzed by Reuters show that job gains in states that cut off benefits and those that didn't were roughly the same.

A study by JPMorgan Chase Institute found that supplemental unemployment benefits "played a small role in deterring jobless workers from finding a new job." 

Payroll processor Gusto found that job growth among service-sector small businesses in states that snipped weekly benefits was about the same as those that didn't.

Catch up quick: 26 states — all but one led by a Republican — have moved to stop paying out the extra $300 in unemployment benefits ahead of the September cutoff. Some also ended special programs that allowed gig workers to receive benefits.

Of note: Maryland, Indiana and Arkansas have to keep paying them out while lawsuits make their way through the court system.

One view from the ground: "I do think there's evidence that as the federal stimulus rolls off, that you'll see an improvement in the application rate," McDonald's CEO Chris Kempczinski told investors this week.

Kempczinski said the company has seen a surge in job applications overall, but more so in states that have cut off benefits early.

The bottom line: Economists say increased unemployment benefits alone aren’t holding back the job market. 

Rather they are helping keep the finances of would-be workers —  at home because of lack of child care, fear of the virus or simply being choosier about where to work — afloat. 

"People are shopping carefully for their next job. But, generally speaking, Americans want to work. And they'll find their way into the jobs that they want," Fed Chairman Jerome Powell told reporters earlier this week.

3. Ending unemployment benefits early isn't juicing jobs

Economists say increased unemployment benefits alone aren’t holding back the job market.

Unemployment

More than half of states are embarking on a grand experiment: prematurely ending enhanced unemployment benefits in order to spur people back to work. What&#x27;s happening: Despite the uproar over the higher payouts, early evidence suggests canceling them only marginally helped employers find workers — that is, if there was any effect at all.

An aggressive offer in Sinking Spring, Pa.

4. Pics of the day: Help wanted

Photo: Ben Hasty/Reading Eagle via Getty Images 

An aggressive offer in Sinking Spring, Pa.<figure><img alt="" height="2268" id="c43d007e-b557-42e9-bdd0-88f51c0d02d0" src="https://images.axios.com/zIJHhHAx8duR63D2lOrI5ERPHkc=/2021/07/31/1627737206455.jpg" width="4032"/><figcaption>Photo: Nicholas Johnston/Axios</figcaption></figure>Spotted at Chicago O&#x27;Hare.

Capital

Axios Capital

When the demand for workers outstrips the supply, wages go up — which is exactly what we're seeing in the current economy. 

Why it matters: The least-loved jobs are often seeing the fastest pay rises.

By the numbers: Food service employees now earn an average of $17.23 per hour. That's hardly a white-collar salary, but it does represent a rise of a full $1 per hour, or 6.2%, just in the four months between January and May. 

By contrast, hourly pay for the same workers was an average of $12.38 per hour in December 2009 — and was still $12.38 some 32 months later, in August 2012. 

Be smart: The headline rise in worker pay if anything understates the degree to which wage costs have risen, since it excludes signing bonuses and other incentives.

Between the lines: Employers love signing bonuses because they're a way of hiring new workers into existing jobs without having to raise the pay of everybody who's already in that job. 

Bonuses also don't become part of the pay that's subject to periodic raises. 

The bottom line: Wealthier workers tend to place less value on one-off bonuses versus higher regular wages. Employers of low-income workers are therefore best placed to use bonuses as an effective way of keeping their wage bill down.

5. Wages go up and to the right

The least-loved jobs are often seeing the fastest pay rises.

Wages

When the demand for workers outstrips the supply, wages go up — which is exactly what we&#x27;re seeing in the current economy. Why it matters: The least-loved jobs are often seeing the fastest pay rises.

A growing number of companies are thinking about requiring employees to vax up for work. 

Why it matters: COVID-19 vaccination rates are plateauing across the country while infections spike. Mandating that all employees be vaccinated will make some workers feel safer about returning to the office — but it risks alienating those who are opposed to getting the jab. 

And with employers trying desperately to hang on to workers — and attract new ones — they may find themselves in a no-win situation. 

Driving the news: This week, a number of states and municipalities, including California and New York, announced vaccine mandates for state employees. Those who choose not to get the COVID-19 vaccine will have to get tested regularly. 

The Department of Veterans Affairs became the first federal agency on Monday to mandate vaccination, and the White House is weighing an expansion. 

Private employers like Google, Goldman Sachs, the Washington Post, Netflix and United Airlines have announced vaccine mandates as well. 

The big picture: In some states, like Georgia, Louisiana, Tennessee and Alabama, less than 40% of the population is fully vaccinated — far from what's needed for local herd immunity.  

In May, 72% of employers said they would not require employee vaccinations, in a survey of 660 U.S. companies by Willis Towers Watson. 

But, but, but: Some of those employers have changed course as the Delta variant has spread and are reconsidering a mandate, Willis told the Wall Street Journal. 

State of play: Unions representing health care workers, firefighters, teachers and police forces, among others, are pushing back on mandates. 

They argue that mandating the shots would be unfairly risky, often citing the fact that the vaccines have not yet received full approval from the Food and Drug Administration.

The vaccines received emergency authorization earlier this year, and experts expect the FDA to grant them full approval in the next couple of months. 

The impact: Employers are walking a tightrope. 

While some are requiring all employees to be vaccinated, others are mandating only that new hires get the shots. 

Vaccine mandates could also be a legal minefield.

The legality of mandates is complicated, given the range of local laws on the issue. The U.S. Equal Employment Opportunity Commission has said that federal law doesn’t bar employers from requiring vaccinations — but some states have taken matters into their own hands and moved to ban vaccine mandates.

In one example of the fallout, Houston Methodist Hospital in April required that workers get vaccinated — and a group of 117 employees sued the hospital system. 

After a judge dismissed the lawsuit, more than 150 employees resigned or were fired following a suspension. 

What to watch: When the FDA fully approves the vaccines, it'll be a watershed moment for the legal debate. 

6. Vaccine mandates complicate the jobs recovery

With employers trying to attract and retain workers, vaccine mandates create a tricky situation.

A growing number of companies are thinking about requiring employees to vax up for work. Why it matters: COVID-19 vaccination rates are plateauing across the country while infections spike. Mandating that all employees be vaccinated will make some workers feel safer about returning to the office — but it risks alienating those who are opposed to getting the jab.