The U.S. Job Market Remains Strong

According to the U.S. Bureau of Labor Statistics’ report released last week, employers added 428,000 in April. The unemployment rate was unchanged at 3.6 percent — matching its lowest level since the start of the pandemic. 

We’ve all heard about the record number of people who quit their jobs since the start of the pandemic. Employers are still attempting to hire more people. Job openings remain at or near an all-time high as businesses struggle to recruit enough staff.

According to the Federal Reserve Bank of Atlanta’s Wage Growth Tracker, workers who switched jobs saw a 5.3 percent increase in median pay from a year ago compared to 4 percent growth for those who stayed put. This is a sure indication that employers will have to raise wages for existing employees (not just new hires) if they hope to retain them. Workers (who appear to be in the driver’s seat) also want more flexible schedules and work-life balance.

However, the higher wages may affect other aspects of the economy. According to this article, Federal Reserve Chair Jerome Powell and his colleagues are concerned that employers may offset the cost of higher wages by raising prices, adding to inflation that’s already the highest in 40 years. You know first-hand about the high inflation if you’ve been to the grocery store, bought gas, or a new vehicle. This concern prompted an increase in interest rates by a half-percentage point. It’s the first time in 22 years that the central bank has hiked rates this much. 

The job market, salaries, interest rates, and inflation all bear watching. Undoubtedly we will see how these factors will change in the coming months.

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