Inflation Concerns Continue as There are Twice as Many Job Openings as Available Workers

Despite a big push from the US government to combat inflation, the labor market remains tight. According to a report, this week, from the Bureau of Labor Statistics, there were almost one million more job openings last month than they had expected.

Specifically, the data shows July posted 11.24 million available positions, significantly besting the 10.3 million that had been estimated (as described in the JOLTS Report—Job Openings and Labor Turnover Survey—from FactSet). This total came out to be roughly 200,000 more than the 11.04 million registered in June, revised from 10.7, which was originally reported.

These numbers reinforce the persistent trend that the US has the issue of more available positions than there are available workers. As a matter of fact, the ratio of jobs to workers is 2-to-1. This, of course, would traditionally be considered an inflation indicator, as employers now must offer more competitive compensation to entice what few workers are still available; and at a time when basic prices are already rising at nearly the fastest rate in at least the last four decades.

Another way to look at this is the hiring and job retention rate(s). In July, hiring fell to 6.38 million. On the other hand, workers quitting their jobs also fell—by 4.18 million—indicating that not only are there fewer workers available to fill all the open positions, but those who are employed are satisfied with their current job. While this 2.7 percent quitting rate is down one-tenth of a percentage point, it is still relatively high, historically.

It is important to note that the Federal Reserve closely watches the JOLTS numbers as a way to track hiring numbers. And while the release of the report, this week, is definitely telling, it came three days before the release of nonfarm payrolls for August. That means the numbers could change in a matter of days.

Accordingly, Fed Chairman Jerome Powell noted, at last month’s meeting that the labor market is, indeed, very tight. He went on to advise that–while certainly not ideal–if persistent rate hikes were to continue it could help soften some of the stiffer conditions of the present labor market.

Such outcomes, however, are “likely necessary to restore price stability,” he adds. Furthermore, he explains, this could establish a strong push towards maximizing employment and, eventually, price stability across the economy.