The US is in the middle of the biggest labor shortage since WW2, Goldman Sachs says

• The labor shortage has reached "the most overheated level in postwar US history," Goldman Sachs says.
• It based its research on the number of filled and unfilled jobs compared with the total labor force.

The US is in the midst of its biggest worker shortage in 80 years, according to Goldman Sachs.

Analysts at the financial-services company said there were 4.6 million more jobs than there were potential workers.

This is "the most overheated level in postwar US history," the analysts said in a note on February 18.

They based their data on the difference between current employment plus job openings, and the total labor force.

The unemployment rate is "fairly low" and job openings are "extremely high," the analysts said.

Labor demand has "rebounded quickly" during the recovery from the pandemic and is now close to normal levels, Goldman's analysts wrote in the note.

But labor supply "has recovered much more sluggishly and remains far below the pre-pandemic trend," the analysts said.

The US had a labor force of almost 164,000 in January 2022, per seasonally adjusted data from the Bureau of Labor Statistics (BLS). Of these, just over 157,000 were employed, per the BLS.

There were close to 11,000 job openings in the US in December, per seasonally-adjusted BLS data. Data for January has not yet been released.

This means that there were around 168,000 filled and unfilled jobs compared with 164,000 potential workers.

At least 3.6 million workers have quit their jobs each month since April 2021, with many using the pandemic as an opportunity to evaluate what they want from work. Some have quit over wages, benefits, working hours, and a lack of remote work. Others have returned to education, switched industries, or taken early retirement.

Industries ranging from healthcare and trucking to construction and education have been affected. Restaurants, hotels, and retail had the highest turnover rates in December, BLS data shows.

Companies have been raising wages, changing benefits, and reassessing how they treat their staff as they scramble to both retain workers. As well as workers quitting their jobs, companies have been struggling to hire, prompting some to offer huge sign-on bonuses.

Real average hourly earnings for workers on private nonfarm payrolls grew by $1.70 an hour, or 5.7%, between January 2021 and January 2022, per preliminary BLS data. But in constant 1982-1984 dollars, workers' pay actually fell by almost $0.20 during that time period because of inflation, BLS data shows.

Goldman's analysts said they expected wages to grow by around 5% year-over-year by the end of 2022 because of increased productivity, as well as labor cost inflation of up to 3.5%.