— This is the script of CNBC's news report for China's CCTV on June 24, 2021, Thursday.
In regard to the job market, there are several important gauges on top of the critical unemployment rate. Among them, the labor force participation rate and the average wage are watched closely. In the United States, the rate of the working-age population who participate in the labor market peaked in early 2000 at 67.3% and since then has been steadily declining, which is seen as a constructional change. America's labor participation rate was dragged down by the pandemic but has been rebounding as the economy reopens. However, it fell unexpectedly in May to 61.6%. At the same time, the average hourly salary of private employees in May climbed to $33.03, a record high and 2% more than a year ago, which indicates rising inflation.
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And when we look at the job searching activity, the Labor Department of U.S. reported that on the last business day of April the number of job openings increased nearly 1 million to a fresh record of 9.3 million, whereas hires were little changed at 6.1 million. At the same time, more Americans were quitting their jobs. The quit rate in April reached 2.7%, the highest since at least 2000. And that number was 1.6% in the same month of 2020. Behind the data are the struggling employers. The tightening labor market is pressing restaurant owners and has already forced several airlines to cancel flights. As a key sector in the pandemic, hospitals have recorded job losses in several consecutive months.
Many think the labor shortage is a result of the unemployment policies introduced amid the pandemic. The extra $300 weekly federal benefit will expire in September, by when some believe the shortage will get eased.
U.S. Congress Representative
“You said if it runs out, that would help with the employment situation”
Chair of the Fed
“I think we will see strong job creations in the Fall, I really do.”
But Indeed finds that job hunting activities have been muted and even lower than national levels in many states that opted for an early exit of the federal unemployment programs. That means there might be more complicated reasons behind the labor shortage, namely needs of childcare, concerns of health safety, and mindset changes regarding jobs. In a March survey conducted by Prudential Financial Inc., one-quarter said they plan to look for a different employer. Another report released in May by EY, a consulting firm, shows that more than half (54%) of employees surveyed from around the world would consider leaving their job post-pandemic if they are not provided some form of flexibility to work. At present, the labor shortage has already brought cost pressure for some business owners. Besides government policies, the Harvard Business Review also offers some suggestions to employers; For instance, to make it easier for employees who commute, to adjust payment, and to increase investment in Covid safety, etc.
The duration of the labor shortage and its impact on wages not only affect business operations but may also have an impact on Fed's policies and financial markets.