The unemployment rate is at an incredible low. In 2018, ten states all simultaneously had unemployment rates lower than 3%, a number last seen in the year 2000.
While today it’s slightly higher (at 3.7% as of August 2019), unemployment rates are still at a staggering low.
In our previous article, we discussed how this low unemployment rate can benefit job hunters on their search for new careers. In this post, we are flipping the coin and addressing the negative side of it all— and how you can prepare for its impact.
Here are a few ways the low unemployment rate could affect your job search:
Many newly developed areas aren’t affordable to live in.
New cities and developments are springing up all across the country, and previously impoverished areas are getting a facelift. Companies are seizing their opportunity in these freshly booming areas and offering new jobs as they open more businesses. This might seem like good news for job searchers, but that’s not always the case.
One drawback to these up-and-coming regions is their spike in housing costs, which can make it unrealistic for some to make a big move. While a higher paying role in another state sounds appealing, oftentimes the inflated housing prices negate the cost benefits. This often makes it a more financially smart choice to take a slightly less paying job in their current area rather than risk not being able to afford a home in the new area.
Labor shortage and retiring Boomers might mean harder work.
Lower unemployment rates mean that companies are having a harder time finding new employees, as they have less candidates in the interview pool to choose from. To combat this, businesses are offering higher wages and more benefits to lock in good candidates.
While higher paying roles benefit job hunters like you, more Baby Boomers are leaving upper executive positions faster than they can be replaced. “The pipeline of young people entering the labor [market] in large enough numbers to replace those leaving the labor force is unlikely,” according to Governing.com, and employees may be overworked to fill those big missing shoes and “earn” their better salary and benefit perks.
Lack of qualified staff can slow business growth.
"The U.S. labor market has tightened to the point where firms are having tremendous difficulty finding qualified and available workers," says RSM Chief Economist Joe Brusuelas.
Companies may not have the capacity to deliver as much of their product or service as they would like if they don’t have enough or the right kind of workers to do the job due to the low unemployment rate. This can result in a vicious cycle, where business growth slows and less hiring results because the company isn’t expanding.
Slower business growth usually coordinates with slower internal/employee growth, so as a job seeker, be wary of companies who don’t prioritize constant development and evolution, or who do not promote a culture of innovation.
Inflation may be on the horizon.
Though we haven’t seen a drastic effect yet in 2019, businesses offering higher wages to new hires may trigger an eventual inflation. If the unemployment percentage keeps falling at its current pace, the Federal Reserve may increase interest rates to try to prevent a spike in prices.
This is all speculation now, but it’s definitely a potential drawback to today’s extremely low unemployment rates— and could dip into your wallet in the future.
Find the Right Fit
While there are a few downsides to this low unemployment, there are also a lot of benefits, like more promising interviews!
Seize your opportunity by signing up for a free GoGig profile. GoGig is a new way to search for jobs based on your personality, helping you to find a business that’s the right culture fit.
Plus, your current employer will have no idea you’re on it! Try it out, today.