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URGENTLY Hiring Says The Signs – Weak Employment Market?

CAMS Weekly View from the Corner – Week ending 5/7/21

May 10, 2021

This past Friday the Bureau of Labor Statistics (BLS) released their monthly report on national employment.  The number of jobs created in the previous month was 266,000.  Estimates were upward of one million so the actual number was comparatively very weak. Various Federal Reserve officials took to the airwaves to share their thoughts.  The consistent message was continued FED support is necessary to help the labor market and this weak employment report is further evidence.  An example of such, the Minnesota 9th District Federal Reserve President Neel Kashkari gave an interview to Bloomberg television stating:  “I have zero sympathy because there are still eight to ten million Americans who want to work who ought to be working. And we need to rebuild this labor market and put them back to work.  And today’s jobs report for all those people who’ve been saying oh my gosh the Fed needs to normalize quantitative easing. Today’s jobs report is just an example of we have a long way to go.”  ( For emphasis, per FED President Kashkari above, our employment backdrop has a long way to go which implies is far from healthy.  This further implies job opportunities are hard to find. Federal Reserve Beige Book The Federal Reserve puts their proverbial boots on the ground within the economic system by connecting with numerous contacts throughout the United States so they can get a sense, from the economic front lines, what is taking place economically.  There are 12 Federal Reserve Districts and all Districts report.  In addition, there is a summation for the entirety of the report. The most recent report from the Federal Reserve’s Beige Book ( offered: “The pace of job growth varied by industry but was generally strongest in manufacturing, construction, and leisure and hospitality. Hiring remained a widespread challenge, particularly for low-wage or hourly workers, restraining job growth in some cases. Wage growth accelerated slightly overall, with more significant wage pressures in industries like manufacturing and construction where finding and retaining workers was particularly difficult. Some contacts mentioned raising starting pay and offering signing bonuses to attract and retain employees.” The above was published just three weeks ago. Our “Beige Book” In speaking with various connections of large, unrelated industry employers all the way down to so-called mom and pop shops of all stripes; they share a consistent labor experience.  Succinctly, they need additional people and cannot attract them.  As shared with me, in the case of larger operations, through their research through their labor networks, people are waiting on more stimulus money coupled with enjoying their increased unemployment benefits.  The two combined seem to be playing a notable role in various companies’ inability to attract employees. For added emphasis, below is a compiled word association that has surfaced in discussions and observations: “Flex schedule……urgent hiring……overtime…..reduced qualifications…….signing bonuses…….bonuses if you stay 90 days…….bonuses if you refer someone who stays 90 days……bonuses if you work regularly scheduled shifts per month without calling off……store closing due to lack of employees…..adding shifts hoping will be more attractive to prospects….shortages due to supply chain disruptions in part due to lack of employees..” Is the Employment Market Truly Weak? With all of the above digested it is as though there is a reality and then a different stated reality.  The Fed’s own Beige Book notes businesses are challenged in attracting and retaining workers.  Employers broadly are scrambling for help.  In some cases they are pressed to remain open in light of their difficulty in attracting people.  And yet, Federal Reserve officials continue to underline the need to continue on with emergency policies via zero interest rate policy and monthly money printing to the tune of $120 Billion. Housing $40 Billion of the monthly $120 Billion of newly created money goes toward purchasing Mortgage Back Securities (MBS) to help the general housing market.  By printing and then purchasing this amount of MBS every month they strive to keep mortgage rates contained in order to help prop up the housing market. Back to their most recent Beige Book whereby they report: “Sustained high demand and tight supply of single-family homes further pushed up prices, and builders noted ongoing production challenges, including rising costs.” The excerpt above does not reflect a housing market that seems to be challenged and yet they continue with emergency policies toward that specific market as well. The Federal Reserve’s dual mandate is price stability and maximizing employment.  Prices are rising consistently and in many aspects of society at an alarming rate.  The employment market is much stronger than suggested to understate the obvious. With the Federal Reserve’s on-going actions and narratives expect higher prices in the economic structure as they are not even discussing altering their broad based emergency policies. In addition, in light of the general employment landscape, broadening shortages and/or even longer lag times in the supply/consumer pipeline can also be expected. I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis


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