Perhaps we are about to see an uptick in pay increases across
the labor market. The Department of
Labor reported last week that the number of open positions exceeded the number
of job seekers for the first time since such record keeping began in 2000. U.S. job openings rose to an adjusted 6.7
million, while 6.3 million Americans were unemployed for the month. The data is the latest sign that the U.S. is
facing a historically tight labor market.While the labor market has tightened, especially in urban
markets, there are still a considerable number of workers saying they are stuck
in part-time jobs or working below their skill level. The total unemployment rate (U-6 rate), which
includes these workers, has just reached the levels before the recession. In May 2018, the non-seasonally adjusted U-6
rate was reported at 7.3%, compared to the official unemployment rate (U-3
rate) of 3.6%.
There still may be workers available for full-time employment, as shown in the U-6 unemployment rate, before wages begin to increase. Employers in urban markets are already experiencing an increase in wages compared to recent years. Ensuring competitive pay levels will become increasingly important to businesses needing to attract new hires and retain their current employees. Employers should consider ensuring their pay systems are up to date with the market.
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