The stock market overreacted today. Job openings increased by 700,000 between July and August. Oh no! The labor market is too strong! Wages will increase! Cost-push inflation will build. The Fed will increase interest rates. We’ll be in recession soon! Boo!

Job openings are clearly falling. From an all-time high of 11.5 million to about 9.5 million in 18 months. With another 18 months of a “cooling” labor market, there will still be an historically high 8 million open positions in February, 2025. The labor market is slowly returning to “normal” after the Pandemic disruption.

This is a solid labor market, not an overheated labor market. Real wages finally grew during 2016-2020, by 7%. They spiked during the pandemic but have been flat for the last 18 months.

The number of unemployed people remains at 6 million, low by history, but not declining to unsustainable levels. 6 million is better than 8 or 15 or 23 million.

It’s a great time to be a job seeker, 3 jobs for every 2 job seekers. This is an historically positive ratio. It has been maintained for 2 years.

The unemployment rate remains at an historical low of 3.5% but is not falling.

Low unemployment is a widespread phenomenon. 22 states are below 3%. Only California, Nevada and DC are above 4.1%.

The labor force participation rate is at a 15 year high, with positive hiring and wage conditions attracting greater participation.

The quit rate remains above the pre-pandemic high, indicating that employees still see a positive labor market, but not an exploding market.

Total employment was flat for the first 11 years of the new millennium, parked at 132 million. Job growth accelerated for the next 8- and one-half years, adding a very solid 20 million new jobs. Post-pandemic, the economy has added another 4 million jobs.

Summary

This remains a Goldilocks labor market, neither too weak nor too strong. The Millennium pause, Great Recession and Pandemic have made us gun-shy. We don’t want to claim victory for fear of disturbing the labor market gods. But we are enjoying victory. 156 million employed versus 132 million employed a dozen years ago. An 18% increase.