As available jobs jumped up to an all-time high of 10.9 million at the end of July 2021 (the highest number of available jobs we have seen in the last 15+ years), the number of new hires remained little changed with 6.7 million. We continue to see a decline in unemployment rate as it dropped to 5.2% in August of 2021 but this is still higher than the pre-pandemic unemployment levels of 3.5% unemployed.
With a total of 8.4 million unemployed persons, but 10.9 million available jobs, employers are having to be more strategic and competitive in their recruitment and hiring efforts. Not only are there 2.5 million more available jobs than there are unemployed persons, but there are a variety of factors that may be preventing the current number of unemployed persons from jumping back into the workforce.
There are more than a few speculations for as to why unemployed persons may not be jumping back into the workforce. One of the most common theories is related to unemployment benefits and how they may be preventing unemployed persons from actively trying to get back to work. Many states responded to this by cutting unemployment benefits early, which only resulted in an overall reduction of spending and had little to no effect in getting employees back to work. Other theories include renewed fear of COVID as the delta variant spreads across many regions of the country, childcare burdens, and lack of financial necessity. Regardless of the reason, the lack of motivation for the unemployed to return to the workforce has forced many employers to adapt in order to keep up with demand.
This increased competition and shortage of available workers has increased demand from job seekers for more benefits, higher pay, and more flexibility from employers. The average hourly earnings for all employees increased by 17 cents to $30.73 in August of 2021, following consistent increases in the last 4 months. According to the Bureau of Labor Statistics, “The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages.”
However, it appears that pickier job seekers seem to have leveled out the average turnover rate, as voluntary quits rate remained unchanged at 2.7% by the end of July 2021. This shows that while it may be harder to find that right candidate initially, employer focus on meeting job seeker demands has a higher chance of preventing turnover.
The following information reflects the total number of jobs added to nonfarm payroll employment, this does not account for the total available jobs on the market.
Employment in Financial Activities rose by 16,000 over the last month with most of the gain in Real Estate (11,000+).
Other notable changes occurred in some industries as follows:
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Bureau of Labor Statistics. (2021a, September). JOB OPENINGS AND LABOR TURNOVER – JULY 2021. https://www.bls.gov/news.release/pdf/jolts.pdf
Bureau of Labor Statistics. (2021b, September). THE EMPLOYMENT SITUATION — AUGUST 2021. https://www.bls.gov/news.release/pdf/empsit.pdf