The US labor market is still experiencing severe labor shortages according to industry think tank the Conference Board, as the economy continues to add jobs.
“The rapid wage inflation in October suggests that the US labor market is still experiencing severe labor shortages, despite the expiration of the enhanced unemployment benefits and the reopening of schools,” wrote Gad Levanon of the Conference Board.
According to Levanon COVID fears, a lesser labor participation rate of older American’s and greater selectivity among Americans regarding job choice are contributing to the shortage, as average hourly earnings have risen by 5.7% since March.
According to October’s US Bureau of Labor Statistics Employment Situation Report nonfarm payroll employment increased by 531,000 in October. Nonetheless jobs still number 4.2 million below February 2020 levels.
“The most likely scenario is that many Americans will return to the labor market in the coming months, and job-search intensity among job seekers will increase, as their savings gradually deplete, leading to labor shortages easing a bit,” notes Levanon. “But while severe shortages continuing into 2022 is not the most likely scenario, the chances of it are significantly increasing.”