Record High Employment Continues Despite Claims Increase

The number of Americans filing new claims for jobless benefits unexpectedly rose last week, but remained below pre-pandemic levels as labor market conditions continue to tighten.

Human Resource executives should not mis-read this increase as a change in employment trends, because skilled workers are still in short supply.

According to the Labor Department on Thursday, this is the first increase for the year, but it has not changed economists’ expectations for another month of solid employment gains in February.

The reality is that signs of an acute shortage of workers in the labor market remain, even though many employers are boosting wages and offering other incentives to retain and attract staff. This has led economists to blame the rise in claims on week-to-week volatility in the Labor Department’s data and harsh weather in some parts of the country.

In fact last week’s data covering the nonfarm payrolls portion of February’s employment report, shows claims well below their mid-January 290,000 number. The economy also created 467,000 jobs in January.

One of JP Morgan’s economists told reports that, “given the regular noise in the data and the range of factors that can impact filings we don’t think the recent jump in initial claims filings is particularly worrisome at this point,”.  The economist, Daniel Silver added that, “overall, we think that the labor market remains tight.”

Even the Federal Reserve seems to be in agreement with Economists, since minutes of the Federal Reserve’s Jan. 25-26 meeting showed that “many” officials at the U.S. central bank “viewed labor market conditions as already at or very close to those consistent with maximum employment.”

Consider that last year nearly 4 million Americans quit their jobs monthly – often for more pay or flexibility. This unprecedented level of job switching gave workers leverage to ask for better pay, and helped to push inflation to its highest level in decades. The last employment cost index (ECI) report showed total pay for civilians in the last quarter of 2022 increased 1%, just shy of a 1.3% record seen between July and September 30, 2022. Wages in fact went up 4.5% last year, which was nearly two times more than it did in 2021.

Reduce and Stabilize Labor Costs to Offset High Inflation and Interests

Some have argued that strong wages gains from the tight labor market is second only to challenging supply chain issues as factors boosting inflation. The Fed is even expected to start raising interest rates in March to quell inflation.

Interest hikes in an environment of high labor costs could threaten profits, and some business owners are choosing to secure their labor force by contracting staffing experts like GEasyHR to stabilize and reduce labor costs.

The hospitality industry could face the greatest challenge to attract and retain general staff, especially since factories across the United States are returning to full capacity.

But factory activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware only grew moderately, because of persistent supply constraints.

According to GEasyHR’s Chairman, Dr. Ramone Williamson, “There are no signs of change in labor market trends, so we are making it easier for clients to contract workers temporarily, even after the market settles”.

In this atmosphere of record employment levels businesses are moving to secure their labor force, and staffing agencies like GEasyHR have dedicated resources towards attracting highly skilled staff.

About the Author

Romaine Gardner is a Human Resource Expert and the President of Venture Holdings Group Inc., the parent company of Globally Easy Human Resources, GEasyHR.