Job openings hit a record high in April, and data signal that employers are having trouble filling spots and holding onto workers, trends that should support wages, economists said earlier today, June 9.
The U.S. Department of Labor reported that job openings at U.S. workplaces rose to a record 5.38 million at the end of April, up 22% from a year earlier and the highest since the series began in late 2000. As has been the case since February, openings have outpaced hires.
“This could be one reason we are seeing wages beginning to accelerate,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research.
Dutta explained that while businesses are posting job openings, some aren’t being filled, signaling a worker shortage and tightness that could support accelerating wages. Even though there are more than eight million unemployed workers, hiring managers may be having trouble finding employees with the right skill sets at current wage rates. So businesses may have to raise compensation.
Here’s another good sign for wage growth: The number of workers who quit in April was up 11% from a year earlier. That trend signals that more workers have become confident in the economy, willing to exchange some career stability for new job opportunities.
More quits “should be supportive of increased wage pressure in the coming months,” Sarah House, an economist with Wells Fargo Securities, wrote in a research note.
The Labor Department’s report on underlying employment trends is based on its monthly Job Openings and Labor Turnover survey, also known as JOLTS. Federal Reserve Chairwoman Janet Yellen has said she pays close attention to the report.
The report on openings echoed other positive jobs data released Tuesday. The National Federation of Independent Business said there was a rise in optimism among its members in May, with growth for hiring plans and current job openings. Similarly, a separate report on private employers recently found that small businesses picked up hiring in May, adding the most workers in five months.
“The latest NFIB and JOLT surveys illustrate that the bigger than expected gain in employment in May was no fluke. Labor market conditions are strengthening and wage growth will accelerate further,” according to a research note from Capital Economics.
A tighter labor market that leads to higher wages should create a virtuous cycle in which families spend more and further support growth.