President Joe Biden celebrated the better-than-expected July jobs report on Aug. 5, calling it "the result of my economic plan to build the economy from the bottom up and middle out."
Are Workers Worried About a Recession?A July Insight Global survey found that almost 80 percent of U.S. workers fear losing their job in a recession, with 54 percent of respondents saying they would be willing to take a pay cut if it meant staying employed.
Recession fears have been paramount for the past several months. However, now that the United States has slipped into a technical recession—back-to-back negative gross domestic product (GDP) readings—workers might be trying to secure employment before the economic downturn amplifies, according to Bryce Doty, senior portfolio manager at Sit Investment Associates.
Although wages increased by 5.2 percent year-over-year in July to higher than $32 per hour, the rate is still behind the 9.1 percent growth in the consumer price index (CPI). With broad-based inflation entrenched in the post-pandemic economy and recession fears seeping into the marketplace, workers might be looking at the millions of employment opportunities to ensure they can survive a slowdown.
"And these job openings have been there for a long time. It’s not like the economy suddenly expanded and companies created new jobs," Doty said in an Aug. 5 note. "It feels more like people burned through pent-up savings and went, 'Oh crap! I gotta get a job!'"
Cody Harker, head of data and insights at recruitment market agency Bayard Advertising, told The Epoch Times that data show a notable increase in jobseeker traffic.
"Job seekers, including those on the sidelines, may be looking to secure employment ahead of an economic slowdown; we’ve seen an increase in conversion rates from completed applications to hires by a staggering 24 percent over H1 of this year," he said. "This could also be influenced by the rise in employment among older workers, who are either reentering the workforce out of necessity or pushing off retirement to stay afloat during a potential recession."
Inflation and ProductivityAnother notable development in the job market has been the immense jump in people who have taken on multiple jobs. The total number of multiple jobholders surpassed 7.5 million in July, up from roughly 7 million at the same time a year ago.
Since the labor market can't deliver the necessary wage gains to endure the current inflationary environment, employees are forced to accept lower pay, Peter Schiff, president and CEO of Euro Pacific Capital, told The Epoch Times.
"How's that a strong market?" Schiff asked. "A lot of people are being forced to take second jobs and third jobs because the job they have isn't enough."
Doty echoed this sentiment in his commentary, noting that "to workers, this is a recession."
Labor productivity has also become a growing concern in this economy.
When output is sluggish and input is immense—unit labor costs advanced by nearly 13 percent in the January-to-March period—it suggests that business costs are growing and the bottom line could be hurting. When this occurs, it can lead to layoffs, experts say. But if companies are desperate for talent, profit margins of the past year may help cushion the blow.
Last week, preliminary nonfarm business sector labor productivity figures will be released, and experts are projecting a 4.6 percent decline in the second quarter. In the first quarter, productivity was down by 7.3 percent, the largest drop in quarterly output since the third quarter of 1947. Hours worked jumped by 5.4 percent, but output tumbled by 2.3 percent.
With GDP becoming more dependent on productivity growth, this could be a significant challenge for the nation, according to Edward Chancellor, an investment strategist and author.
Layoffs Across AmericaThe other aspect of the current labor market that has stumped economists is the growing number of layoffs and Americans filing for unemployment benefits.
U.S.-based firms announced plans to cut nearly 26,000 jobs from their payrolls in July, up by 36.3 percent year-over-year. This was the second-largest number of job cuts this year, according to Challenger, Gray and Christmas.
The Fed is WatchingWhile the headline reading might dismiss the plethora of concerns about the labor market, economists and market analysts are digesting the extensive information.
Whether that will eventually lead to a slowdown in jobs remains to be seen, but the Federal Reserve will be paying close attention.
If current labor conditions are withstanding the central bank’s tightening cycle, financial markets are indicating that they believe they can afford the institution the opportunity to pull the trigger on a 100-basis-point rate increase at the September Federal Open Market Committee policy meeting.