The American worker has lost all leverage
unemployment rate, the US labor market would appear to be thriving. Most any economist would say this is about as good as it gets, implying the economy is at or near or near full employment. Well, that’s one way to look at it. Another is via the hiring rate, which is sending a very concerning signal — and one that suggests a reversal of recent fortunes for the American worker.
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That measure has been falling, dropping to 3.3% in November, a level that signals the labor market is in a deep recession. Yes, recession. Aside from a single month at the start of the pandemic, the hiring rate suggests that the labor market has not been this weak since it was struggling to crawl out of the deep 2007-2009 recession caused by the global financial crisis, according to Bureau of Labor Statistics.
What’s unusual about the current situation is that these two metrics should be inversely correlated, with a low unemployment rate implying a high hiring rate, and vice versa. Indeed, there were 22 months between 2000 and 2022 in which the hiring rate was 3.3%, like now, and the average unemployment rate over those months was 8.2%, double the latest 4.1% reading.
What this all means is the balance of power that, coming out of the pandemic, has given workers leverage over employers — an immeasurable but vital force for
