In the latest jobs report from the Bureau of Labor Statistics, the unemployment rate sits at 3.8%, yielding a total of 6.7 million people unemployed in the United States. Similarly, the number of job openings sits around 6.6 million. Thus, in the current job market, the number of job openings is nearly equal to (and fast approaching) the number of unemployed Americans. Looking at historical figures, it has been over thirty years since the number of job openings has outpaced the number of unemployed Americans. In addition, US Consumer Sentiment is near a ten-year high, showing that consumers are confident in the overall health of the US economy. US consumers see a bright short-term as well as strong prospects for long-term economic growth. The statistics speak for themselves, economic conditions are in a good spot for many individuals or employees to take advantage of the economy as a whole, and more specifically the job market. Currently, individuals are taking advantage of the job market at an alarming rate.
Given these unemployment statistics and the strong economic sentiment, Americans are quitting jobs at the fastest rate since 2001. In fact, in May 2018, 3.56 million left their positions. This number is up 200,000 from the previous month. While the connotation of increasing quitting is negative, the effect is actually a huge positive for individuals in the job market. The rising number is a positive because it indicates that employees are leaving their current positions to find jobs which provide better wages and benefits. In past conditions, the number of unemployed Americans far out-paced the number of job opportunities, leading Americans to remain in their current jobs out of fear of not finding a new one. In that same environment, a new job did not always ensure improved wages or benefits as companies had the upper-hand. With the shift in ratio between jobs available and unemployed Americans, individuals have begun to gain their own leverage.
While rising quit rates have increased opportunities for individuals, they are forcing a negative pressure on companies and the Federal Reserve. As more and more workers continue to search for better paying jobs, companies are forced to raise wages at a faster rate to retain the top talent. At the same time, many companies are also pushing to rapidly hire to keep up with their growing demand. As hiring hastens, the effects of wage increases accentuate. With many experts’ predicting that the unemployment will fall below the 3.8% mark in the near future (a level not seen since the 1960s), there is no clear end in sight. The push to continue to move wages upward also causes a secondary effect on the Federal Reserve. Increases in wages and benefits across the board are being closely watched by Federal Reserve policy makers. These increases are often signs of upward inflation which could change the Federal Reserve inflation hike rate policy.