U.S. labor markets continue to remain tight as competition for talent is still high, evident by the increase in job openings within sectors such as transportation, warehousing & utilities, education & health services and government. Employers are still facing challenges in filling vacancies as job openings remain high. Separations increased MoM and YoY; however, quits declined MoM and increased YoY. Workers might be more cautious, as layoffs and discharges increased both MoM and YoY. Within the tech industry, 27,332 employees and 227 firms were impacted by layoffs in the month of June. The unemployment rate stayed the same, while the labor force participation rate slightly decreased, indicating that there are many Americans that are not a part of the U.S. labor force, specifically 5.6 million that would like a job, but are currently not looking. Americans are dealing with inflation as it impacts all facets of life, including wages. Nominal wages are behind real wages, as inflation has increased YoY by 9.1%, while real average hourly earnings decreased by 3.6% during the same period. Despite inflation, demand for business travel spending and leisure travel spending is predicted to increase from 2022 to 2026 by 28.8% and 17.3%, respectively.
Job openings remain elevated
Job openings slightly decreased from 11.6 to 11.2 million this May, signaling a relatively tight U.S. labor market. Although job openings declined by 3.7% MoM, they increased by 16.8% YoY. Since last month, the job openings to hires ratio remained the same at 1.7, while the number of job openings to job seekers decreased from 1.9 to 1.8. There were 5.3 million more job openings than workers available, a decrease from the previous month of 5.7 million. Job openings were up in trade, transportation, & utilities (+130K), education & health services (+10K) and government (+10K), while the largest decreases were in professional business services (-325K), durable goods manufacturing (-138K) and manufacturing (-70K).
The fill rate or the ratio of hires to job openings increased by 3.2% MoM; however, it declined by 8.8% YoY. A fill rate greater than 1 indicates firms have hired more employees than open jobs, while a fill rate less than 1 indicates the opposite, signaling inefficiencies in hiring, which is a challenge many U.S. firms currently face. The fill rate for professional & business services, trade, transportation, & utilities and accommodation & food services were below 1 for the month of May. The fill rate for trade, transportation, & utilities declined by 9.1% MoM, while the fill rate for professional & business services increased by 31.2% MoM.
Unemployment & Labor Force
The headline unemployment rate (U-3) for the fourth straight month remained unchanged at 3.6%, pointing to signs of a continuing tight U.S. labor market. The labor force participation rate decreased slightly from 62.3% to 62.2% from May to June. Alternative measures of labor utilization such as the U-6 unemployment rate, which captures the marginally attached (discouraged workers) and those that work part-time for economic reasons, decreased from 7.1% in May to 6.7% in June. The employment to population ratio, which is the proportion of the country’s working age population that is employed, decreased MoM by 0.3% and remains below pre-pandemic levels.
U.S. labor markets continue to experience slack or inefficiencies in the economy. There are still 560,000 fewer civilians in the labor force, and the labor force participation rate is 1.2% below pre-pandemic levels.
In terms of age cohorts, labor force participation rates increased for 16 to 19-year-olds and 20 to 24-year-olds MoM by 0.3% and 0.7%, respectively, but decreased for 25 to 54-year-olds and those 55 years and over by 0.4% and 0.8%, respectively. Labor force participation rates for all age cohorts remain below pre-pandemic levels, except for 16 to 19-year-olds, whose rate remains unchanged.
Despite the shortage of workers, the number of non-farm jobs increased by 372,000 for the month of June, with the largest gains made in the following: professional and business services (+75K), leisure/hospitality (+67K), and healthcare (+57K). Real-time data from Lightcast’s job postings shows a 12% decrease in job postings from May to June, and a 23% increase YoY.
News on this topic:
According to the American Lifeguard Association, there is a national shortage of lifeguards, as real-time job posting data shows a 200% increase YoY for lifeguards. Currently, 37.5% of employed lifeguards are 14 to 18-year-olds, followed by 34.2% who are in the 19 to 24-year-old age cohort.
Separations increase, including quits and layoffs
Total separations – the summation of quits, layoffs/discharges and other separations – increased by 0.3% from April to May, but increased by 8.5% YoY. Quits decreased by 1.3% MoM, but increased by 11.3% YoY. Quits were up in arts, entertainment and recreation (+19K) and down in real estate and rental & leasing (-33K). Layoffs/discharges increased MoM and YoY by 5.9 and 11.3%, respectively. Initial jobless claims, which serve as a proxy for layoffs, rose from 231,000 to 235,000 for the week ending July 2, but these numbers were very close to 2019 pre-pandemic levels, reminiscent of a strong labor market.
The quit rate increased for the information and education & health services industry MoM by 5.9% and 4.0% respectively, while the quit rate for financial activities decreased by 31.8% MoM. Quit rates increased for construction, manufacturing, professional & business services, education & health services, and arts, entertainment and recreation YoY and declined for trade, transportation & utilities, information, leisure & hospitality and accommodation & food services.
Tech Layoffs
In recent months, large tech firms such as Netflix have started layoffs, and other firms such as Coinbase have rescinded job offers to new hires, signaling caution and risk aversion by some in the tech industry. Trueup, which tracks tech industry and data trends, has developed a Tech Layoff Tracker which keeps a count of layoff events by tech firm and the count of employees impacted by layoffs. From January 2022 to June 2022, 355 layoff events have occurred, impacting 65,674 employees. The numbers are expected to rise as global uncertainty and an impending U.S. recession are concerning many tech executives.
Gains in Employment and Average Hourly Earnings
The YoY growth in employment and average hourly earnings is the highest for Leisure & Hospitality, given pent-up demand for travel. Mining & logging and transportation & warehousing experienced large gains in employment YoY of 10.4% and 8.1%, respectively, while utilities experienced a decline in employment by 0.1%. In terms of wage growth, utilities and education & health services experienced a 6.1% increase YoY in average hourly earnings, while financial activities experienced the smallest gain of 2.4% YoY. Wages remain below inflation, as annual wage growth is 5.1% compared to annual inflation which is at 9.1%.
Americans still have a strong desire to work remotely
American workers desire approximately 2.2 days a week to work from home according to work from home research at Stanford University. Offices are experiencing less traffic, as Kastle’s office occupancy data reported a decline from 43.8% to 39.6% during the June 29 to July 6 timeframe, possibly as a result of summer travel. McKinsey’s recent American Opportunity Survey asked Americans about their attitudes regarding remote work this past spring, reporting that 58% of Americans reported having the opportunity to work from home at least one day a week. Among those that had the option to work remotely, 61% of men were offered the option to work remotely, compared to 52% of women. With respect to age, 64% of 25 to 34-year-olds were offered the opportunity to work remotely, compared to 58% of 35 to 54-year-olds.
The desire to work from home, especially for many women, is due to caregiving responsibilities for children or older family members. According to the recently released BLS American Time Use Survey 2021, among women 35-44, 56.6% of their time was spent on an average day caring for and helping household members, compared to men in the same age category, who spent 40.8% of their time doing the same activity in 2021. For every age cohort, women spent more of their time in caregiving compared to men in both 2021 and 2019. Data collection for 2020 was suspended due to COVID-19, and therefore is not reported below.
Supply chain pressures remain high
The cost of a 4th of July cookout increased by 17% YoY according to the American Farm Bureau Federation. Farmers are facing higher costs for inputs like fertilizer, as commodity prices have been impacted by the ongoing geopolitical conflict between Ukraine and Russia. The Global Supply Chain Pressure Index (GSCP) developed by the Applied Macroeconomic and Econometrics Center of the New York Federal Reserve Bank tracks the state of global supply chain constraints using data from the transportation and manufacturing sector. As is evident in the graph, supply chain pressures remain at historically high levels, which translates into businesses holding extra inventory, resulting in decreased profits with potential hiring freezes and layoffs.
U.S. consumer sentiment reached its lowest level ever recorded
The University of Michigan’s consumer sentiment reported a 50 for U.S. consumer sentiment in June, the lowest level ever recorded since the reporting started in November 1952. Much of the pessimism is being driven by concerns of inflation in the form of high gas prices, rent and food. Americans are using their personal savings, as pandemic relief has expired and inflation is eroding wages. The U.S. personal savings rate was 26.6% in April 2020; however, it is 5.4% as of May 2022. According to the U.S. Census Bureau’s Household Pulse Survey, data from June 1 to June 13 found that 17.4% of Americans are using credit cards or loans to meet spending needs, while 13.9% are using money from savings or selling assets or possessions, including withdrawals from retirement accounts.
Demand for services such as travel and leisure are high
Higher prices are impacting Americans across income levels differently. Bank of America’s July Consumer Checkpoint reported that total credit card spending excluding gas and groceries decreased by 1% for lower income households YoY, but it remained positive for higher-income households given pent-up demand. The U.S. Travel Association has predicted that business travel spending will increase by 28.8% and leisure travel spending will increase by 17.3% from 2022 to 2026.
Mixed sentiments on a recession
There is a mixed sentiment on the U.S. economy, as macroeconomic indicators such as inflation and interest rates are rising with considerable effects on consumer spending and the construction of new homes. Volatile markets and a first quarter decline in GDP (gross domestic product) have also caused some economists to assign probabilities of a recession. Bloomberg Economics assigned a 38% probability, while Morgan Stanley assigned a 30% probability for a recession that could happen in the next 12 months. The U.S. labor market, however, offers optimism, as the recent employment data indicates a strong labor market.
- Market Your Benefits to Employees with Virtual Benefits Fairs - February 15, 2024
- Building a Better Campus Recruiting Playbook - January 23, 2024
- The Anatomy of a Hiring Event Strategy - January 15, 2024
- Beyond Career Fairs: 5 More Ways to Use Your Hiring Event Technology - January 2, 2024
- Your Recruiting Playbook: The Template for a Hiring Event Strategy - December 7, 2023
- How to Measure Candidate Experience Earlier—and Why It Matters - November 5, 2023
- The Scoop: Recruitment Trends & Industry Insights | October 2023 - October 31, 2023
- Top Strategies for Hiring Veterans & Military Spouses - October 3, 2023
- The Scoop: Recruitment Trends & Industry Insights | August 2023 - August 29, 2023
- Optimizing Your Recruitment Strategy with Event Tracking Links - August 23, 2023
You must be logged in to post a comment.