The US is seeing the odd combination of high unemployment and rising job vacancies. Canada has so far been able to avoid that, but signs of it occurring are beginning to appear, according to BMO. Douglas Porter, the bank’s chief economist, took a dive into business hiring data. Businesses are increasingly slowing activity due to the inability to find employees. This isn’t just low-wage labor either, but there’s a big skilled labor shortage as well.
The US Is Seeing Rising Job Vacancies and High Unemployment
The labor and hiring disconnect has been a really hot topic in the US. The country’s latest data showed 8.7 million unemployed people, along with 10.1 million job openings. With such a significant unemployment rate, it does seem a little odd if you haven’t been following it. “The issue isn’t quite as extreme in Canada—at least not yet—but there are signs of stress,” said Porter.
Over 40% of Canadian Businesses Are Reporting A Skilled Labor Shortage
Hiring is tough these days, shows Canadian Federation of Independent Business (CFIB) data. They found 41.5% of businesses are reporting a skilled labor shortage. Another 29.9% of businesses reported being unable to find unskilled labor as well. BMO notes it was just shy of the 2018 record, and both are above pre-pandemic levels. It’s the single biggest issue restraining sales and/or production.
Jobless Rate Far From Tight, Making Rising Job Vacancies “Odd”
This sort of dynamic is typical in markets with a low unemployment rate, not when it’s elevated. “That’s odd, given that the jobless rate is far from tight, and is 1.8 ppts above Feb/20 levels,” he said.
Adding, “if the job market was operating smoothly, the employment rate would be higher and/or there would be fewer reports of shortages.”
It’s Hard To Hire Millions of People
What’s behind the issue? A combination of factors, with everything from low wages to unemployment benefits blamed. Those may be contributing factors, but the biggest one is much more simple. It’s hard to hire millions of people. Or re-hire them, in this case.
Hiring booms are typical of a booming economy, which comes with low unemployment. Pandemic restrictions led to layoffs, as well as business closures. Now companies have to ramp up rehiring as restrictions are lifted. Now we have a hiring boom, in the middle of a recession.
Many people are now looking for new gigs, rather than rejoining their old ones. Since there are so many jobs, people are also able to negotiate wages — leading to a wage bump. The wage bump is also incentivizing existing employees to apply to new gigs. It’s a hot mess, to say the least.
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