Workers in the Driver’s Seat
This Labor Day workers have good reason to celebrate. For the first time on record, the number of job openings exceeds the number of unemployed. As the labor market tightens, workers should increasingly find themselves in the economic driver’s seat.

  • In contrast to the early portion of an economic cycle, when companies have a large pool of potential employees from which to choose and wage growth is anemic, the current labor market consists of nearly 1.1 open jobs per unemployed person.

  • This unusual situation is caused by many issues, including mismatched skills and geography. The Northeast has the lowest rate of job openings while the South, Midwest and West all have much higher rates. Among industries, the highest rate of job openings is in accommodation and food services.

  • The byproduct of a tight labor market is stronger wages, which have been accelerating in the U.S. over the past year. The companies best positioned for this environment are those whose earnings are least susceptible to higher compensation expenses and are most productive from a labor standpoint. For example, software companies might be less vulnerable to higher wages than restaurant companies, which generally earn less revenue per employee.


The views expressed are the views of Fred Alger Management, Inc. as of August 2018. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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