The last time we had truly full employment in America was during World War Two. It’s a horrible thought, I know, but we ought to look at the ramifications of Putin’s invasion of Ukraine.
The world was at war then and all hands were needed in in our factories to win the fight. (Remember Rosie the Riveter?) We may need to do so again if the Ukraine war spreads beyond its borders.
It could mean the huge demand for workers will continue, and push wages even higher.
Today’s JOLTS report showed that businesses continue their massive hiring effort in January and may continue to do so for the rest of this year. The Labor Department is reporting that after falling to as low as 4.6 million early in the pandemic, the number of open jobs soared above 10 million last summer for the first time ever. They have remained extremely high since then.
And though the economy has added an average of 614,00 new jobs in each of the past five months, businesses still say it’s hard to attract new employees and retain old ones.
“The number of job openings was little changed at 11.3 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.5 million (blue line in Calculated Risk’s graph) and 6.1 million (red bars), respectively.”
This gives us an idea of the immensity of the U.S. economy, as well as its future direction..
The yellow line on Calculated Risk’s graph shows how high the demand for jobs has risen. And more are quitting their jobs to find better jobs. Some 4.3 million quit their jobs in the month. Quits peaked at 4.5 million in November. Before the pandemic, the number of people quitting jobs averaged fewer than 3 million a month.
There were 6.3 million Hires (blue line in graph) and 6.1 million Layoffs (red bar), so we should look for more job growth this year, in spite of the touted labor shortages.
But why are so many being hired if that is the case? More are re-entering the work force than was expected.
“Some 300,000 people entered the labor market in February, pushing the increase over the past six months to 2.5 million. Perhaps not coincidentally, economists note, the surge in the labor force began around the time that extra federal benefits for the unemployed expired,” said MarketWatch’s Jeffery Bartash recently.
A wider war is probably not in the cards with NATO saying the Ukraine invasion is not “our” war, but even the threat of war has caused economic activity to pick up, historically.
And with the largest number of immigrants fleeing the war zone since World War Two, who knows what can happen next?
Harlan Green © 2022
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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