Record 4.5mn US workers quit jobs in March as labor market tightens

A record 4.5mn US workers quit the labor force in March, while the number of job openings hit a new high of 11.5mn, underscoring employers’ struggles to fill positions as inflation ripples through the economy.

Government data released on Tuesday confirmed a trend under way as the US recovers from the coronavirus crisis while workers gain leverage with businesses. The numbers of job openings and voluntary resignations have remained elevated, while businesses desperate to hire have raised wages and sweetened incentives to lure workers away from their old jobs, elevating the quits rate.

The figures for both openings and quits were the highest since records dating back to December 2000.

“Despite job openings seemingly plateauing for the last few months, the new record high indicates demand for workers is clearly still red hot,” said Daniel Zhao, an economist at jobs site Glassdoor.

Concerns over the public health situation and childcare responsibilities have kept some Americans from returning to the labor force since the start of the pandemic, leaving job openings outpacing the number of Americans actively looking for work. In March, there were 1.9 jobs available for each unemployed worker, far above the pre-pandemic ratio, which was 1.2 in February 2020.

Retailers drove the surge in job openings, posting some 155,000 new positions in March. Workers in low-wage sectors have been the biggest beneficiaries of the tight labor market, economists say, and have had the most opportunities to switch jobs.

Business leaders have lobbied to expand immigration to combat labor shortages after pandemic travel restrictions greatly reduced arrivals of both highly skilled and blue-collar workers. Federal immigration officials on Tuesday announced an automatic 1.5-year extension to expiring or expired work permits, effective Wednesday, for immigrant workers.

“Despite concerns about an imminent recession, employers are still looking to hire at near historic rates and are desperately holding on to the workers they have,” says Nick Bunker, an economist at jobs site Indeed. “The labor market is still very much a jobeeker’s market. Something dramatic will have to happen for this to change anytime soon.”

The tight labor market, alongside surging petrol and food prices, have contributed to the highest US inflation in four decades. Businesses including Starbucks and Chipotle have attributed their own price increases to growing labor costs.

The Federal Reserve is expected to continue its aggressive tightening of monetary policy in an effort to stem inflation. After delivering its first interest rate increase since 2018 in March, the Fed is expected to issue an aggressive half-percentage point rise at its meeting this week.

On Friday the Department of Labor is scheduled to issue a monthly payrolls report. Economists surveyed by Reuters expect the data to show a US unemployment rate of 3.5 per cent, returning to levels reported before the 2020 onset of the pandemic.

Source link

Powered by BeaconSites