(Bloomberg View) -- President Donald Trump has been in office just seven months, but it’s not too soon to make this prediction: He’ll break his promise to create 25 million new jobs.
That’s because Trump inherited the strongest labor market in modern times, with record openings exceeding the supply of applicants. Today, corporate America is struggling to find the help it wants.
“The Trump economics team can start to walk the public back on its promises to bring back jobs, jobs, jobs,” Chris Rupkey, managing director and chief financial economist at MUFG Union Bank, wrote in an email earlier this month to clients and others. “There are no more people around for companies to employ.” The latest data from the U.S. Department of Labor, he added, shows why “employers are begging for workers to come aboard and help them produce and sell their goods and services.”
There were 6.16 million unfilled job openings on June 30, the most since such data was first compiled in 2000. That’s more than the 5.5 million people who were hired during June, and the unemployment rate continued to edge down to 4.3 percent in July, according to data compiled by Bloomberg.
Big and small companies alike are benefiting from the booming job market: S&P 500 companies now employ more than 25 million people for the first time, up 24 percent since 2009 when Barack Obama began his first term as president during the worst recession since the Great Depression.
The Russell 3000 firms employ a record 37 million inside the U.S., an increase of 63 percent since 2009, when the economy was losing 750,000 jobs a month and already had lost a record 9 percent of gross domestic product as the unemployment rate climbed to 10 percent, according to data compiled by Bloomberg. While non-farm payrolls had a slower annual increase under Obama than they did under Presidents Jimmy Carter, Bill Clinton and Ronald Reagan, they rose for 75 consecutive months, the longest streak since 1939.
And while the trend continues, the gap between hiring at S&P 500 companies, which includes many workers abroad, and the Russell 3000, is the widest ever. People seeking jobs with small business, the traditional U.S. job engine, are finding them faster than at any point in history. Since 2014, employers have been creating jobs faster than they can fill them, Bloomberg data show.
Job openings are up since 2012 everywhere across the U.S., by 82 percent in the West, 76 percent in the Midwest, 68 percent in the Northeast and 67 percent in the South. So far this year, the South leads the nation with almost 2.2 million openings, followed by the Midwest with almost 1.5 million, the West with 1.4 million and the Northeast with 1 million.
Education and health, professional and business services, and health-care and social assistance are the industries hiring the most people, at 1.2 million, 1.2 million and 1.1 million, respectively. Mining and logging, two of Trump’s favorite industries, hired the fewest workers — 23,000 — according to data compiled by Bloomberg.
The prospect of labor shortages, however, hasn’t set off a corresponding increase in wages, leaving economists struggling to explain why companies haven’t offered better pay to attract the workers they need. Theories include the retirement of highly paid baby boomers, who can be replaced by cheaper younger workers, along with central bank interest-rate policies and a rebound effect following the inability of employers to reduce wages during the recession.
“If employers can’t find an adequate supply of workers, or workers with appropriate skills, they simply need to offer a higher pay rate,” says Carl Riccadonna, U.S. economist for Bloomberg Intelligence. “The main point of the whole situation is sluggish pay.”
Even with slow wage growth, “Companies are running out of workers to hire to do the job or even train to do the work, and this is a ticking time bomb for economic growth,” says MUFG’s Rupkey. “There is not enough labor to allow the economy to grow at its current rate. The reality is President Trump inherited the strongest labor market of any president in history.”
(With assistance from Shin Pei)
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Matthew A. Winkler is a Bloomberg View columnist. He is the editor-in-chief emeritus of Bloomberg News.
To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net.
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