THE EMPLOYMENT crisis in the United States continues despite a substantial improvement in July. Thousands of companies still have open positions and are not receiving applications to fill their job vacancies.
According to the Bureau of Labor Statistics, July saw 528,000 jobs added, somewhat making up for the number of jobs lost during the pandemic. However, those service-related vacancies mostly remain available.
During the pandemic, following government-mandated lockdowns, thousands of companies were forced to close their doors. However, thousands of others opened vacancies to hire employees, and very few people came to apply. While this was happening, the federal unemployment bonuses and COVID relief checks were still in effect.
While the bonuses helped many Americans who were left without an income, they also served as a “disincentive” for thousands of Americans to look for work by filling available job openings. In the face of this, the country’s economy continues to suffer the consequences.
In June there were more than 10 million job openings for fewer than 6 million applicants.
In its monthly report, the U.S. Department of Labor added that the number of Americans quitting their jobs declined slightly, but remained high at 4.2 million in June.
“We have a lot of jobs, but not enough workers to fill them. If every unemployed person in the country found a job, we would still have 5 million open jobs,” the U.S. Chamber of Commerce representing the country’s businesses summed up in a statement.
What happened is that many people stopped working in 2020 when the U.S. economy was in the throes of the pandemic, but they did not come back to work. Now some of the most available positions are salespeople, waiters, teachers and mail carriers.
The Chamber of Commerce agrees that the shortage of workers has to do with early retirements and low migration. But it also has to do with generous government assistance during the pandemic.
A report by the AFP news agency pointed out that one effect generated by this employment crisis is the competition between companies offering better salaries while employees surrender to the highest bidder.
“Wage earners are taking advantage: for the past year, millions of them have been changing jobs every month, as employers compete with each other by offering better wages and better working conditions. This phenomenon has increased the average hourly wage,” the report reads.
The average hourly wage has risen and depending on the sector in which you work, you can be paid from US$15 and up. In the private sector, for example, they now pay $32.27 per hour, an increase of 5.2% in one year.
This situation generated a new outcome in the United States, which contributed to historically high inflation because as wages increase, companies are forced to increase the price of their goods and services; all this while the Biden administration announces higher taxes that will also impact companies’ finances.
Businesses across the country not only face employee shortages, but they must now also submit to Biden’s “Inflation Reduction Act,” legislation that raises taxes on individuals and businesses to fund $430 billion in subsidies for clean energy, healthcare and cutting the budget deficit.
The regulation establishes a minimum tax of 15% for large companies, making it much more difficult for companies that are already facing a shortage of personnel.
In July there were 1.7 jobs for every unemployed person, which means that companies in various sectors are competing with each other for workers.
Johnny C. Taylor Jr., executive director of the Society for Human Resource Management, told Associated Press that while many companies cannot offer salaries that keep pace with the cost of living, some offer more perks to get applicants to apply, including working from home, subsidizing day-care for children, or paying for employees to commute to their jobs.
“With inflation, employees that are otherwise happy at work are forced to look for another job. It’s a retention problem,” he said. “You might have an employee who loves their workplace, but they’ll say, ‘I have to go across the street for the job that will pay me 20% more.,” the specialist said.
Job switchers keep seeing large returns for getting new jobs. Median wage growth for this group rose to 8.5% year-over-year in July pic.twitter.com/M7zHfG8Bzi
— Nick Bunker (@nick_bunker) August 11, 2022
“The US labor market is stronger today than many thought possible. But cracks are emerging, signaling that it’s not going to last,” Troy Ludtka, senior U.S. economist at Natixis North America LLC, told Bloomberg.
Ludtka forecasts that the unemployment rate will reach at least 5% by early 2023. “Now, the economy is slowing,
Baby boomers and the employment crisis
One boom that came with the pandemic and continues to impact the worker shortage is the wave of baby boomers and early retirement.
These are millions of people who, fearing for their health, decided to take early retirement and took advantage of rising stock and real estate prices to sell and enjoy their savings, leaving their jobs behind.
Nick Bunker, head of economic research and U.S. labor market specialist for job search site Indeed, recently told AFP that the number of retirements in the United States is one of the main causes of the worker shortage.
“Part of that is just the US population continues to age (…) We haven’t had immigration at the pace to replace the baby boomers. It has rebounded a little bit, but still not at the levels we were seeing several years ago,” he said.
Layoffs are also on the rise
Although the U.S. has returned to pre-pandemic unemployment levels, some large employers such as Walmart have begun to lay off some of their staff, due to the low level of profits during the last quarter.
A number of technology companies such as Netflix, Microsoft, and Meta have also laid off some of their staff or halted hiring over the past few months due to weak economic indicators and weak corporate earnings.
On August 22, it was also announced that Ford will cut 3,000 jobs this week in the United States, Canada, and India as part of the company’s restructuring plan.
In the letter, executives explain that the company’s restructuring is forcing changes in Ford’s use of resources as well as its “cost structure,” which “is not competitive with traditional and new rivals.” The company said it is eliminating work while reorganizing and streamlining functions.
The announcement of the layoffs comes at a time when many companies are accelerating their cost-cutting efforts in the face of rapidly rising inflation and fears of a downturn in the economy.
Sabrina Martín Rondon is a Venezuelan journalist. Her source is politics and economics. She is a specialist in corporate communications and is committed to the task of dismantling the supposed benefits of socialism // Sabrina Martín Rondon es periodista venezolana. Su fuente es la política y economía. Es especialista en comunicaciones corporativas y se ha comprometido con la tarea de desmontar las supuestas bondades del socialismo