Auburn University finance scholar James R. Barth recently commented on the record low unemployment rate and the effect on employers’ efforts to fill jobs and keep good employees.
Barth is the Lowder Eminent Scholar in Finance at Auburn’s Harbert College of Business, a Senior Fellow at the Milken Institute and a Fellow at the Wharton Financial Institutions Center. He has been a visiting scholar at the U.S. Congressional Budget Office, Federal Reserve Bank of Atlanta, Office of the Comptroller of the Currency and the World Bank.
Although low unemployment rates are good for those employed, what does this mean for employers? Is it harder in the current job market to fill vacant positions and what challenges are there to keeping good workers from searching other higher-paying opportunities?
Low unemployment rates mean that employers find it productive and profitable to hire a relatively high percentage of individuals seeking to work. This is a win-win for both employees and employers. Of course, the lower the unemployment rate, the more difficult it becomes for employers to fill vacancies. However, it must be realized that there is currently a gap between the skills that some employers seek and the skills processed by some of those seeking work. This situation has led some employers to hire foreign workers who obtained visas to work here. Lastly, a way to keep good workers from going elsewhere is to provide them with the opportunity to learn more and move into more responsible and higher-paying positions. Even then, some employees may leave due to locational preferences.
Do you anticipate the latest low unemployment rate to hold firm? Or could an adjustment be on the way?
Unfortunately, the fiscal and monetary authorities have not been able to eliminate business cycles. That is to say, recessions occur now and then. We are now in an extremely long economic expansion, which typically means the likelihood of a recession increases every month that goes by. However, it is not clear which shock (such as a collapse in some asset prices or a widely spreading coronavirus) will occur that will throw the economy into a recession.
What are the benefits to an employer in a low-unemployment economy?
The benefits to employers/firms in a low-unemployment economy is typically increased sales, revenues and profits, not to mention an increase in the stock prices of companies.
What does the current economy and subsequent low unemployment rate mean specifically for industries in the state of Alabama?
Low unemployment rates are associated with good times for both industries and employers in Alabama and elsewhere. Of course, unemployment rates are not low for all firms or all industries in Alabama. Some firms and industries clearly benefit more than others even when the statewide average unemployment rate is low due to a dispersion in unemployment rates.
This story originally appeared on Auburn University’s website.