Mike Earl, CFP®, CPWA®
Via Sam Ro at Axios: pre-COVID, the US already had a record number of job openings at over 7.5 million. Today, we are another 22% higher in job openings -- 9.2 million. The upside of this labor market is the underlying reality that our economy is growing. Wages are going up (but so is inflation).
The unemployment rate is 5.9% today, compared to 3.5% in February 2020 (pre-COVID). That 5.9% unemployment rate equates to 9.5 million unemployed persons in America. However, the Bureau of Labor Statistics (BLS) reported in June "the number of persons not in the labor force who currently want a job was 6.4 million."
So you have 6.4 million people chasing 9.2 million jobs. What gives? In the Axios article linked above, Sam Ro states:
"Numerous factors are holding workers back, including concerns about the coronavirus, child care issues, comfortable financial safety nets, and the enhanced unemployment benefits that are currently rolling off on a state-by-state basis."
Here is a deeper dive into where the major job openings lie:
- Government -- 900,000 job openings
- Leisure and hospitality - 1,400,000 job openings
- Retail -- 974,000 job openings
- Professional and business services -- 1,500,000 job openings
- Education and health services -- 1,650,000 job openings
- Construction -- 300,000 job openings
- Manufacturing -- 815,000 job openings
Looking back over the past 20+ years of job openings in America, we note the current level of openings is DOUBLE the number of job openings we saw during the economic boom of the mid-2000s (leading up to the Great Recession).
As investors, we and our clients should benefit from a robust labor market, as it indicates a growing economy -- and a growing economy is a good thing for US stock investors.