Everyday Americans are feeling the weight of inflation more than ever as gas prices and food prices soar to new heights.
We haven't gotten many answers from the current administration on how we're going to deal with inflation and how American families are going to get themselves out of this financial hole. And to make matters even worse, economists are pointing out that our job market is in the middle of a crisis.
A Record-High Number of Americans Are Quitting Their Jobs
New government data says that 4.4 million people quit their jobs last month in the U.S., which has left employers in a "brutal battle" to find low-wage workers, according to senior economist at Emsi Burning Glass, Ron Hetrick. The record-high number of people quitting their jobs in a month was 4.5 million in November 2021.
As many workers are quitting their jobs to find a higher-paying option, employers listed 11.3 million job openings in February (that number was 11.4 million in December 2021). We're seeing a much higher number of job openings than the number of employees looking for work. Unfortunately, this outsized number of available jobs and resignations is contributing to inflation because companies have to consistently raise their wages to bring in new workers — and keep them. The central bank is hoping to decrease the number of open jobs in order to halt wage increases and price inflation.
The outsized number of available jobs and resignations is contributing to inflation.
Additionally, many Americans are simply choosing not to work, whether they're retiring early or they're collecting a pretty penny from the government in unemployment so they don't feel the need to opt in for work. Economists say it's unclear whether any of these people will be returning to work anytime soon.
"In a month when the economy added 678,000 jobs, the number of job openings only went down by 17,000," Stephen Stanley, chief economist at Amherst Pierpont, said. "That speaks to the depth of the bid that employers have for labor."
Both wages and salaries rose 4.5% in 2021.
"If you were just moving down the number of job openings...you would have less upward pressure on wages," Powell said. "We need to use our tools to move supply and demand back" into alignment.
As employers become increasingly more desperate to find employees, both wages and salaries rose 4.5% in 2021. This is the fastest pace we've seen in our economy in the last 20 years. Unfortunately, this means that businesses have to charge their customers more in order to cover the increase in labor costs. It's no wonder inflation increased 7.9% since last year, a 40-year high.