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Markets and Policy
U.S. Labor Market Just Flipped: Play the Employer’s Market Now
U.S. job openings have fallen below the number of unemployed workers for the first time since 2021. Wage leverage flipped. Here’s how to play the new employer’s market.
By William Bronson
All featured assets were selected independently and objectively by the authors. Finance Play may receive compensation via ads and affiliate links.
The U.S. labor market has cracked: the job openings-to-workers ratio fell to 0.98, which means more people are looking for work than there are available jobs. The data for August (the latest official data available) shows 7.227 million job openings but 7.384 million unemployed workers. The difference may sound small, but it’s symbolic: since April 2021, job seekers have had the advantage. Now, employers do.
For workers, the psychological shift is troubling. When job listings outnumber job seekers, you can push for better pay, benefits, or even a signing bonus. Now, however, employers have the upper hand, knowing the list of applicants is growing.
How Labor Dynamics Create Investment Opportunities
Wage Dynamics Flipped
For the past four years, job switchers were the big winners. The “switcher premium” meant leaving your company often guaranteed a raise with your new employer. That premium is now gone. The Atlanta Fed’s data shows that job-stayers’ pay grew 4.1%, slightly above the 4.0% for switchers. The bargaining chip workers relied on has been taken off the table. Employers no longer need to overpay to keep people in their seats.
Labor Impacts Market Growth
When labor supply outpaces demand, growth usually stalls. In July 2009, at the depths of the Great Recession, there were 6.5 unemployed workers for every job opening. In April 2020, during the COVID lockdown, the ratio hit 5. Today’s reading is under 1 and looks tame in comparison, but history shows the direction of travel matters more than the absolute number. Once the balance tilts, bargaining power shifts quickly and decisively.
Second-Order Effects Investors Can Front-Run
Margin tilts back to employers: Companies that were squeezed by constant turnover and wage hikes can breathe easier. Sectors in consumer staples, utilities, and healthcare will now see better margins.
Automation accelerant: Employers that once leaned on bonuses to keep workers are swapping churn costs for software and AI. The World Economic Forum expects 83 million jobs to be displaced globally by 2027. WEF Tariffs may dominate headlines, but automation is the stealth force rewriting payrolls.
Duration and defensives get the bid: Investors know the playbook. When growth cools and the Fed cuts cautiously, money flows into high-quality bonds and necessity-driven sectors that deliver reliable cash flows.
Opportunities During the Labor Demand Shift
The U.S. labor market just flipped, and job seekers now outnumber job openings. Wage pressure is easing, margins are stabilizing, and defensive sectors are positioned to benefit as employers regain bargaining power. Click a ticker below to see why it’s one of our top picks for a defensive play:
Bottom Line
With the era of worker shortages ending, employers now hold the edge. That shift favors defensive cash-flow equities and long bonds. ETFs like XLP, XLU, XLV, and SPHD let investors capture stability while positioning for an employer’s market.
This website shares our opinions and commentary on markets, commodities, and other assets. We may receive financial compensation to include certain featured companies/services/etc. in this website. Such financial compensation may impact the placement, but it does not impact on our critical analysis. The opinions, analysis, and commentary contained in the website are not financial advice. Market data mentioned here may be delayed and is not real-time. Investments involve risk including the risk of loss of some, or all, of your investment, and may not be suitable for all readers. While we make a good faith effort to provide you with unbiased professional opinions, please don’t make investment decisions based solely on this content — always do your own research or talk to a qualified advisor before making any investment decisions. We’re not responsible for any actions you take based on what you read here.
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