When the Fed announced its latest interest rate hike this week, Fed Chair Jerome Powell reaffirmed his view that there’s still too much employer demand for workers — driving wages higher, and fueling inflation.
But the Fed wants to see a “normalized” job market, said Dean Baker at the Center for Economic and Policy Research.
“So what I mean by that is job growth that can be sustained, that basically absorbs the sort-of natural growth — people turning 20, whatever age, entering the labor market.”
And so far that hasn’t happened.
Job openings actually spiked up by 400,000 in September, said Tuan Nguyen at consulting firm RSM.
“The job market at the moment is still very tight, and I believe it is still too tight for the Federal Reserve to slow down on its interest-rate hikes moving forward.”
Meanwhile, people are quitting their jobs voluntarily – often to get better, higher-paying ones – at a much higher rate than any time in the last 20 years, said Tulane economist Gary Hoover.
“What the Fed thought would happen was that with these higher interest rates, quits would start to diminish, and we could start to see some cooling in the labor market. That would put less income into the pockets of consumers, and therefore slow down inflation.”
Instead — with so many workers quitting, there’s still a lot of upward pressure on wages.
But, there are some signs that the job market’s cooling, at least a little.
“We are seeing job-search intensity rise, so the share of job-seekers who are looking frantically every day and urgently is going up,” said Julia Pollak, chief economist at online job site ZipRecruiter.
Meanwhile, she adds, recruiting intensity by companies that are hiring is going down.
“So the share of job-seekers who are being recruited by employers, rather than having to find the work themselves, is starting to fall. And employers are not having to go to quite the same lengths to sign candidates. The share of postings with signing bonuses is falling,” she said.
And, as employers get less desperate to hire, fewer of them might offer flexible schedules and work-from-home options.
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