More Americans are looking for jobs and unemployment worries are at their highest level in a decade, according to a new survey released by the Federal Reserve Bank of New York on Monday.
According to the NY Fed, the average expected likelihood of becoming unemployed in the next four months reached 4.4% in July, the highest in the survey's 10-year history. This compared to 3.9% a year ago.
The expected likelihood of moving to a new employer also increased, rising to 11.6% last month from the 10.6% seen in July 2023.
More respondents are also actively on the job hunt, with 28.4% saying they've been searching for a new job over the past four weeks — the highest level since March 2014 and an increase from 19.4% in July 2023.
The survey, which also noted decreased satisfaction with wage compensation, non-wage benefits, and promotion opportunities at respondents’ current jobs, comes as the Federal Reserve weighs recent labor market weakness with the unemployment rate now at 4.3%.
Investors will also be closely watching expected annual revisions from the Bureau of Labor Statistics (BLS), which could knock up to a million jobs off previously reported job growth over the last year.
Economists and strategists have warned any further deterioration of the labor market would likely have a negative spillover effect on markets and beyond.
"The problem is that we continue to see weakness in the labor market and we think that that's going to ultimately be what drives this market lower," Ahmed Riesgo, chief investment officer at Insigneo, told Yahoo Finance on Tuesday.
"We know that the US consumer is doing OK, but the US consumer is doing OK because they still have a job. The second that the employment market flips from one of surplus to one of deficit, which is something that we think we're rapidly nearing, we think the US consumer, unfortunately, will falter."
Recent data, however, has painted a more constructive picture of the economy.
Consumer prices have continued to ease closer to the Fed's 2% inflation target. Positive retail sales data for July showed the consumer is still spending. Consumer confidence is rebounding. And recent filings for initial unemployment benefits have fallen more than expected.
"We're coming off unusual lows [in the unemployment rate] following a very unusual time during the pandemic," Joe Brusuelas, chief economist at RSM, told Yahoo Finance on Tuesday.
"A lot of the rules that some of these so-called forward-looking investors use aren't really going to work this time because the economy is in a very different place."
Given those indications, which signal the US economy could be entering a "Goldilocks scenario" where growth expands while inflation retreats, traders are looking ahead to Jackson Hole for clues of what could come next.
"I think [the Fed] will have to certainly move in terms of the commentary," ING chief international economist James Knightley told Yahoo Finance on Tuesday. "So I think it will be, one, acknowledging inflation has slowed, perhaps a little more quickly than they had been thinking, and that the jobs market may be slowing a little more rapidly than they had been believing would be the most likely case."
Markets are currently pricing in a nearly 100% chance the Federal Reserve cuts interest rates by the end of its September meeting. The odds of a 25 or 50 basis point rate cut are now split roughly 70/30 after 50/50 odds placed last week, per the CME FedWatch Tool.
If you're at the point where you're haggling over price, your relationship with your employer could be all but over. Waving a competing offer at your boss might not end well.
I've been in the business world for over 40 years, even being Microsoft's VP of HR; in my experience, you should not seek or accept a counteroffer. The result could be ugly.
When your employer is forced to make you a counteroffer, the company might feel like they've been held hostage. They might not trust you again. What's to prevent you from going out and getting another offer next month — holding them hostage yet again?
The company will be wary. You won't be trusted with sole ownership of projects — you could be gone. You won't get additional training or opportunities — why invest in someone who can leave so easily?
You won't even get the raises or promotions you might otherwise deserve. Because with those things in short supply, the company might give them to people who aren't at risk of leaving.
You may get your counteroffer, but that's all you'll get. You've clarified that your relationship with the company is purely economic. "Fine," they may say, "we can play that game too."
The delicate trust bond is gone.
The one time to haggle
When you're first negotiating your job offer, discussing compensation — haggling over the price — is fine, even expected. At that time, all points of your employment are open for agreement. You and your future employer are trying to come to reasonable terms, to figure each other out.
It's perfectly reasonable, even encouraged, to push back on the terms of your job offer.
When the salary negotiation time has passed
Once you've been on the job for a while, everything changes. You've established yourself as a competent, even outstanding, employee. Your employer knows you and your work, and the terms of your relationship are stable.
If you get another job offer and approach your employer with it, they'll be caught off guard. They might even be hurt. It doesn't matter if you've previously used your one-on-one time with your manager to clarify your need for more compensation. Threatening to leave changes everything.
You've gone as far as to interview and pursue another job, all the way to the point of a firm offer. For your current employer to feel some sense of betrayal is to be expected.
No, it's not fair
To be clear, the company that's now questioning your loyalty has none for you. At the first sign of a downturn or your struggle with performance, you'd be let go in a heartbeat. Yes, this isn't a fair or equitable relationship, but you likely already knew that.
A delicate balance of trust has been broken. Your employer assumed, even trusted, that you'd continue to work under the existing terms. You've surprised them by being willing to walk away—for what? More money.
Looking for another job means you're willing to move on
Many components make up a job. The work, the people, the culture, the products, the mission, and yes, the compensation. Yet, you've already interviewed and received an offer from another company. That indicates you're willing to move on from the many other components of your current job.
Something besides money is probably also not right where you are. Something money alone can't fix. Even if money is the only reason you're interviewing with other companies, you need to ask yourself why your current company is only willing to offer you the money you deserve when you threaten to leave.
The answer is often depressing. Because they didn't think you were worth it, and they're only offering it now because they're in a bind.
Should you even take a counteroffer?
What I've seen happen next depends on the situation. Often, a company can turn on you, escort you to the door, and remain hurt or insulted. Other times, if your position or the situation is critical, they may try to convince you to stay.
First, they'll try the non-monetary approach. They'll talk about how much you enjoyed the work, your peers, the challenges, the perks, and so on. They might even speak highly of your potential future there.
Beyond that, they'll occasionally try to counteroffer to convince you to stay. They'll match or beat the offer from outside. The question is, should you take it?
Either take the new job or don't
I argue you should never take a counteroffer.
What happens almost always is that you've made your terms clear. You're just at the company for money. As the saying goes, "Not that there's anything wrong with that," but the pretense is all gone. Your relationship with your job is different. It's purely economic.
My advice is, either take another job or don't. Don't expect your employer to counteroffer, they might not. Whatever you do, don't use an outside offer as leverage unless you're 100% willing to take that other job. It may well be the only one you have.
Regardless, even if you get a counteroffer and accept it, the terms of your employment are now completely different. And you might not like that new relationship at all.