The US is seeing the odd combination of high unemployment and rising job vacancies. Canada has so far been able to avoid that, but signs of it occurring are beginning to appear, according to BMO. Douglas Porter, the bank’s chief economist, took a dive into business hiring data. Businesses are increasingly slowing activity due to the inability to find employees. This isn’t just low-wage labor either, but there’s a big skilled labor shortage as well.
The US Is Seeing Rising Job Vacancies and High Unemployment
The labor and hiring disconnect has been a really hot topic in the US. The country’s latest data showed 8.7 million unemployed people, along with 10.1 million job openings. With such a significant unemployment rate, it does seem a little odd if you haven’t been following it. “The issue isn’t quite as extreme in Canada—at least not yet—but there are signs of stress,” said Porter.
Over 40% of Canadian Businesses Are Reporting A Skilled Labor Shortage
Hiring is tough these days, shows Canadian Federation of Independent Business (CFIB) data. They found 41.5% of businesses are reporting a skilled labor shortage. Another 29.9% of businesses reported being unable to find unskilled labor as well. BMO notes it was just shy of the 2018 record, and both are above pre-pandemic levels. It’s the single biggest issue restraining sales and/or production.
Jobless Rate Far From Tight, Making Rising Job Vacancies “Odd”
This sort of dynamic is typical in markets with a low unemployment rate, not when it’s elevated. “That’s odd, given that the jobless rate is far from tight, and is 1.8 ppts above Feb/20 levels,” he said.
Adding, “if the job market was operating smoothly, the employment rate would be higher and/or there would be fewer reports of shortages.”
It’s Hard To Hire Millions of People
What’s behind the issue? A combination of factors, with everything from low wages to unemployment benefits blamed. Those may be contributing factors, but the biggest one is much more simple. It’s hard to hire millions of people. Or re-hire them, in this case.
Hiring booms are typical of a booming economy, which comes with low unemployment. Pandemic restrictions led to layoffs, as well as business closures. Now companies have to ramp up rehiring as restrictions are lifted. Now we have a hiring boom, in the middle of a recession.
Many people are now looking for new gigs, rather than rejoining their old ones. Since there are so many jobs, people are also able to negotiate wages — leading to a wage bump. The wage bump is also incentivizing existing employees to apply to new gigs. It’s a hot mess, to say the least.
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This is true, I work in Fin Tech for one of the big 5. Head hunters have been contacting me over the years. Last year the offers where around 120-140kish. This year its been 160-180k……. And at least 30% of my team jumped ship in the past 6 months……. The employers needs to increase pay to retain talent.
Simple coder makes over 100K in Silicon Valley USA
Canadian salaries are extremely low with extremely high taxes and extremely high cost of goods.
I can’t even imagine how to afford anything decent in Canada now.
A point that needs to be made more often is Canada’s recovery is at a different phase from the US, so it trails. In theory, the reopening in Canada will lead to higher wages and inflation. It’s just early in this cycle.
Everyone wants wage and home prices to rise, until they realize they’re paying $100 for a can of tuna, and their quality of life is actually reduced.
What about the crazy hiring practices for skilled labour. You know like multi-stage interviews, doing demos, testing and behaviourial exams, and presentations before getting an offer? Think that may have an impact too, hmmm? And anything like 6 to 8 week hiring cycle for any single position.
“ Many people are now looking for new gigs, rather than rejoining their old ones. Since there are so many jobs, people are also able to negotiate wages — leading to a wage bump. The wage bump is also incentivizing existing employees to apply to new gigs. It’s a hot mess, to say the least”
God forbid workers have choices…and corporations have less leverage over new recruits. A massive reckoning is long overdue.
lol yeah I was laughing at that writing… having wage growth and choices with employers is an extreme positive that hasn’t been seen here in awhile. It isn’t a “hot mess” at all, but an extremely good thing as people act more in unison.
Only for people that don’t understand basic math. Inflationary pressure on prices when unemployment is high means higher inflation, not a *real* increase in wages. It’s inefficiency, not growth.
Look at the PPI. These higher wages are flowing right into wholesale costs and coming out the other end for consumers.
I’m in a union position working among a group of non union workers. The entire non union group got called into the office and got raises as they were all leaving for the same work at other companies will to pay much more. My company finally decided to stop the bleed to hold onto the staff they have.
I hope their raise is enough to afford decent housing in the area.