The U.S. labor market is entering uncharted territory. There are more job openings than people looking for jobs, which is leading to a term called “negative unemployment.” While unemployment has dropped dramatically following the Great Recession, unfortunately, the labor participation rate hasn’t materially recovered. Here are a couple of stats to show this:

• The labor participation rate was 66.2 percent at the start of the Great Recession.
• As of February 2019, the participation rate sits at 63.2 percent.

What this all means is simply this — a lower percentage of the population is choosing to work or look for work. Said another way, negative unemployment is the result of the bounce back in the economy without a bounce back in labor participation. Either way you look at it, it most definitely has an impact.

As you may have guessed, the lack of available workers is putting tremendous pressure on Human Resources teams. And, for growing companies, the pressure to retain employees has never been higher. The time and expense to fill open positions are mounting. As it stands now, that lack of available talent is becoming the greatest growth constraint for many employers.

How does this impact employee benefits? Well, all of this employment pressure makes increasing deductibles and per paycheck contributions for health insurance risky. Employers don’t want to risk giving employees a reason to look elsewhere. Historically, this labor environment has led to big cost increases in health insurance. The healthcare provider and health insurance sides of the cost equation know employers will tolerate big increases in this environment.

So, do I expect a big increase in health insurance inflation and renewals? No! In spite of the economic opportunity, there’s an opposing threat to high inflation in health insurance. That pressure comes from the federal government. History also shows that healthcare inflation and health insurance increases diminish in times of intense government pressure for major reform. Fueling voter angst through high inflation is dangerous when politicians have turned their focus to healthcare.

My prediction is employers will absorb a higher percentage of cost increases, and hospitals, physician groups, and health insurers will be cautious to significantly increase prices in the face of the government-run health insurance threat. We’ll see if my prediction rings true!