The Lag In Unemployment No One Is Telling You About
The headlines this morning around the unexpected uptick in unemployment are interesting.
Interesting because conversations with HR professionals and business owners across the country would not point to a loosening up of the talent pool - not in quantity or quality. The US worker shortage is still alive and well.
Here's a take on what's happening...
At Daggerfinn, we have clients that operate along the entire human capital lifecycle. This gives us a unique insight into certain demand dynamics. One of our clients offers offboarding services, and demand has been skyrocketing for a quarter or two.
We saw during the pandemic, and even in 2008, that workers - who have a little bit of money in the bank - are not always incentivized to immediately find a new job after being laid off. Perhaps there are some improvements around the house that need to be done? Perhaps a spouse makes enough money to cover their costs for the time being.
When circumstances allow for it, this means that laid-off workers often can, and do, sit on unemployment for as long as they are eligible.
So while the uptick in unemployment may seem 'surprising' to many who look around and see 'We're Hiring' signs posted everywhere, the underlying dynamics around unemployment benefits could be contributing to what we're seeing in the numbers.
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What happens going forward?
As long as it is the case that there is elevated demand at our client in the offboarding space, which is in direct alignment with what the Fed is looking to do with its inflation and unemployment targets, we can expect to see unemployment continue to tick up, lagging layoffs by as long as workers are eligible for unemployment benefits.
What's the problem?
With school loan payments coming back at the end of the year, and well-publicized credit balances ticking up, it's not hard to fathom a world where we see a surge back into the workforce in six months.
The problem, however, is if everyone decides that it's time to go back to work at the same time but the open jobs have dried up because of decaying macroeconomic conditions, we could see real issues.