The current labor markets are not easily understood. The economy has been slowing down, yet unemployment is low, job growth is good, participation is still below pre-pandemic highs and quit rates are still high.
Jobs are available, but there are segments of the market that are not going back to work or not happy with current jobs and quitting. McKinsey has referred to this as the Great Attrition. Despite the efforts of the Fed, labor has not significantly changed in response to rising interest rates.
Perhaps workers are so used to an environment where it is easy to find new jobs that they do not fear quitting, but the workforce is not deeply engaged with employers. There is a disconnect on the causes and what employees and employers think are important for sticking with a job.
Our fear is that this uncertainty or disconnect leads to false signals on link between policy, markets, and the real economy. What happens if quit rates are high but hiring slows quickly? There can a strong surprise increase in unemployment. Similarly, if quit rates slow, hiring will quickly fall. The likelihood for large labor dislocations is high.
No comments:
Post a Comment