US Labor Market Still Broken Funhouse Mirror, Data Shouts

If you’re looking for a job, there are 10.925 million of them available. Or at least there were on the final business day of December.

Not only that, but based on any indicator you care to consult, the only thing rising faster than wages are housing prices. Well, housing prices and inflation. And therein lies the problem. Unless you want to take a position in leisure and hospitality, you might find that even as your wages rise at the fastest pace in decades, your inflation-adjusted earnings are shrinking. So, you’re rich! Unless you want to buy something. What a conundrum!

The market was looking for 10.3 million on the headline JOLTS print. 10.925 million was thus a “beat,” depending on your definition of “beat.” Too many job openings is an indicator of persistent labor market friction, something that scares policymakers. It’s a reminder of the potential for a wage-price spiral as employers throw money at anyone willing to put on a name tag — only to turn around and raise their own prices, leaving “Hi, my name’s Jane!” to see her raise reflected in the prices of the canned goods she’s stocking before it shows up on her pay check.

Hires fell by 333,000 in December to 6.3 million. That pushed the gap to a new record high of 4.662 million (figure above).

The largest increases in openings were observed in accommodation and food services, where employers begged for 133,000 workers (that series is extremely noisy, but it’s worth a mention).

Quits fell in December — “all the way” to 4.3 million. That was the third most for any month in history trailing only — checks calendar — the prior month and the month two months prior to that one (figure below).

The quits rate barely budged. December wasn’t a record, but it was close (black line in the figure).

It goes without saying that layoffs and discharges remain at series lows. You can’t fire anybody when you’re desperate for workers.

There’s little utility in editorializing further. The US labor market is a funhouse mirror. For decades, we fostered an intrinsically unstable system, built on the backs of low-paid workers in the services sector from whom we clipped coupons and generally exploited while constructing a (extravagantly adorned) castle in the sky. The pandemic forced a reckoning.

If we’re being honest, the US economy is experiencing a self-feeding dynamic that started with stimulus and lockdowns, evolved into a kind of mass, collective rethink about what counts as “fair” when it comes to wages, which jobs really require in-person interactions and what the government’s role should be in providing for its citizens.

None of that is bad. Indeed, a rethink of the capital-labor relationship was decades overdue, as was a reevaluation and overhaul of the country’s embarrassingly inadequate social safety net. But much as the global transition to clean energy is proving to be just as disorderly as it is urgent, America’s reckoning with an unsustainable economic model is manifesting in rolling blackouts and acute disruptions which, in extreme cases, render businesses completely unable to function.

Finding a “balance” that keeps the lights and the heat on while humanity shifts to energy sources that won’t doom future generations to climatic oblivion is proving to be quite an onerous task, mostly because we waited too long to get started. The same is true of the US economy. It took a once-in-a-century public health crisis to get the ball rolling. Now we’re experiencing the kind of disruptions that go along with decades of procrastination.

Read more: The Cost Of Procrastination: America’s Broken Economy