The second quarter ‘Unit Labor Cost’ report showed a jump to 1%. It was expected that it would go up by about .8% so it was in line. However, the quarter before the labor cost shrank 2.8%. There is something very odd going on in the labor market. There is a record 10 million jobs available while at the same time for July the jobs increase was significant driving down the unemployment rate. Why are so many jobs available not being filled? Employers say they are not getting ‘qualified’ candidates.
Also noted was the quit rate. This refers to the number of workers leaving their jobs voluntarily. It is very high and that denotes confidence by the employees as they look for better jobs and are willing to quit their job in order to do so.
We have a record number of job openings, salaries rising, and employees are leaving their old jobs for better ones obviously for higher salaries. Does this suggest a tight labor market? If so, why isn’t the unemployment rate much lower?
I think we can blame covid for changing the labor market in new ways not yet fully understood.