As job openings in the United States hit 11.5 million, the national economy is seeing an unusual phenomenon: workers are voluntarily leaving their jobs as household spending increases rapidly.
As the economy shifts into recovery mode from the pandemic, the labor market is regaining strength and is nearing pre-pandemic rates. Data from the U.S. Labor Department shows that as job openings hit a record number, the "quit" rate is also at its absolute highest. According to the New York Times, businesses are trying to meet increased demands for more goods and services and are looking to hire new talent to expand their businesses. However, workers are also looking for a role that provides fair pay and a reasonable, flexible working environment. The more available jobs, the more a worker's abilities are in demand, and the higher negotiating power they feel they have when interviewing for a role.
Additionally, households are continuing to spend, feeling emboldened by their new power over the labor market. And, while usually businesses increase prices when they see more active consumers, this issue is complicated by supply chain problems, inflation, and worker shortages, said the Economic Policy Institute. As workers can now negotiate salaries and maintain quitting power, businesses must spend more on hiring in addition to raw materials, impacting their bottom lines. But consumers are not yet balking at paying extra costs on products, as they feel more in control of their potential income than in years past.
"We're learning a lot about how structurally fragile our economy is," Claudia Sahm, a former economist at the Federal Reserve, told the Times. "We depend on endless low-wage workers and just-in-time supplies of goods to keep consumer prices depressed."
In light of current circumstances, financial advisors such as Tony Roth, the Chief Investment Officer of Wilmington Trust Investment Advisors, advise clients to invest in companies that can raise prices without decreasing demand, also called "pricing power." These include goods and services essential to consumers' lives, such as groceries, transit, or healthcare.