Since January 2009 through February 2017 the United States has created over 9.5 million jobs per Bureau of Labor Statistics data, and now a major risk is that the nation is at full employment. Why is this a risk? As if there are no more people able (or willing to work), history shows us that this is when inflation can start to flare.
Not only have their been almost 10 million jobs created since 2009, but the unemployment rate has dropped from 10% in October 2009 to its current 4.7%. In addition there are over 5.5 million jobs that are unfilled according to the monthly Job Openings and Labor Turnover Survey (JOLT) report. Companies are desperately trying to find qualified workers and are waiting for someone to step up and take a job.
When combining all of these figures, many experts (including economists and business leaders) are starting to think the US is at so called full employment. This means that anyone that wants a job can get one in very short order.
So what is the risk here? The biggest concern is inflation. With employers unable to find a capable person to fill a job then they may slowly but steadily bid up wages. At first this can be good news for Americans, but if sustained, this good news can quickly turn to bad news. As full employment, with increasing wages, leads to inflation.
This means that interest rates will go up during 2017. Maybe even suddenly. It is already happening with the mortgage market, with 30 year loan rates increasing about ¾ of a percent since late 2016 and it it now at the highest level at any point in 2017. The federal reserve is now also on a path of increasing short term rates, which will make car loans, credit card rates, and personal loans more expensive.
Full employment, and resulting wage increases creating inflation, can lead to higher prices for everyday goods. So any increase in salary will be offset by higher consumer costs. So businesses will just increase prices for everything from food to cars and more. Higher wages equal higher prices.
2017 employment prospects
With everyone able to get a job (granted maybe not at the income they would prefer) now is the time to plan for the future. When the economy is at full employment it is easier to gain new skills, learn the latest technology, and in general make yourself more productive all while staying gainfully employment. It is much more difficult to keep up with all of the changes in a certain field or career if you are out of the labor market.
So use this time to gain new skills. Then leverage them into a better and/or higher paying job. Or even make career change…there is no better time. As if the economy is at full employment, that means when a promotion comes up at work that there will be less competition for it, and you are more likely to be promoted. Or this means if a company down the road posts for a new open position (and the job is a step up the income/career ladder to you), that company will struggle to find a worker. So you can apply at the business down the road and you have a better chance to get the job.
Full employment is a huge positive for the individual worker. It rarely happens, and 2017 is the time to strike. Gain new skills, seek a better job, or start a more effective career path. As now is the time to increase your household income. Granted more of it may go to pay off the higher cost of living due to higher inflation and interest rates, but maybe your income can increase faster than those costs!