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Friday, December 09, 2022

The chilling out ‘great resignation’ would drop the US unemployment rate to 5%

The effect of the Federal Reserve’s increasingly aggressive policy on a labor market that Records an unemployment rate of 3.5% But record levels of worker resignations and unfilled positions, unknown to many analysts.

But a LinkedIn study dares to put figures in the panorama that will spare the fight against inflation and the ‘great resignation’ led by Jerome Powell: Unemployment rate rises by 1.5 points from levels recorded in Julyup to 5%.

Although for many citizens, even in Europe, A ‘romantic’ vision of great sacrifice persistsIn which millions of workers quit their jobs to find themselves away from unsatisfactory jobs, the truth is that Option to earn better wages with better working conditions Weighs much more than a perceived ‘adventure spirit’.

Understand, Enough to analyze what happened to the hotel and restaurant industry, They were the areas most affected by the pandemic. And yet, when it recovers, there is one development that has puzzled economists: its workers are gone. But this is only the beginning of the mystery.




Because the analysis, signed by Rand Ghayad, Head of Economy and Global Labor Markets at LinkedIn, yields a result that contradicts the ‘spirit of adventure’ thesis: Most of the workers who quit find employment in the same sector,

development of the relationship between vacancies and unemployment, expressed in the Beveridge curveThe difficulty in filling vacancies appears to be attributed to the paucity of workers willing to work in those sectors.

But Gayad points out that this conclusion The effect of ‘temporary layoff’ will be biased (equivalent to Spanish Ertes). With the economy reviving, many of these workers have found themselves in a hurry to get hired with companies and are willing to pay better than their competitors. And this has given them more power to demand better pay. So why change sectors?

No ‘Courageous Spirit’

By ‘drawing’ the evolution of Beveridge’s curves Temporary layoffs without effect on workersThe result makes it very clear that the distortion is not due to a ‘drain’ of talent, but Because the said talents push to improve their working conditionsStarting with salary.

This is particularly relevant for two reasons. First, it changes the ‘grand resignation’ to ‘grand resignation’.great restructuring‘, which is the term Microsoft’s careers platform uses (the great reshuffle) to refer to the event.

but it also extends the range of The effectiveness of Fed policies To work without harm to employment.

The US Central Bank is well aware that The ‘overheating’ of the labor market Over the past two years it has shifted to salaries and from there to prices. This tension between job supply and demand, according to an estimate prepared by the Chicago Fed in February will automatically add 1.1 points to inflation.

But fear that monetary policy will lead to a painful increase in unemployment near pandemic levels (when the unemployment rate exceeded 10%), exists. You can also find echoes of this in the Fed chairman’s speech When he says there will be “some pain” in the measures,

it won’t come for free

“While theoretically it is not possible to reduce vacancies without increasing unemployment, its change in the nature and slope of the Beveridge curve give a ray of hope in the tension surrounding the future state of the labor market,” says Gayad.

In this sense, it states that “a decrease in job offers in December 2019 will be associated with an unemployment rate of approximately 5%”.

But keep in mind that the unemployment rate in the US was 3.6 percent that month. This confirms that the Fed’s policies in terms of employment will not come for free.

pandemic relief, You’d have to go back to 2016 to find a figure similar to the 5% forecast by LinkedIn. But the impact is still far from the worst forecast for an economy that has already entered a technical recession.

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