- The US labor market is showing signs of softening as job openings decreased from 10.6 to 10.3 million over September to October
- There were 4.2 million more US job openings than workers available, while labor market tightness measures such as job openings to job seekers remain elevated
- US wages remain below inflation as annual nominal wage growth is 5.1% compared to annual inflation which is at 7.1%
- Global labor markets remain relatively stable with slightly higher unemployment rates projected for 2023 as many central banks tighten monetary policy to curb inflation
- Global uncertainty has led candidates to prioritize different factors such as compensation, getting ahead in their careers, and meaningful work when searching for job opportunities
- From a global perspective, employers will need to reassess their recruiting and retention strategies to tap into alternative labor pools and realign incentives to job seekers who are changing preferences
US labor market is showing signs of gradual cooling
US job openings decreased from 10.6 to 10.3 million over September to October, a decrease of 3.3% MoM and 6.9% YoY, indicative of a cooling job market in which employers might be able to source talent from the recently separated, specifically those with no job but who are actively looking for employment.
US job seekers continue to be in an advantageous position
The job openings to job seekers ratio, which is one of the measures to assess the labor market tightness, continues to remain elevated at 1.7 compared to the pre-pandemic level of 1.2. The fill rate, which is the ratio of hires to job openings, was at 0.58 in October 2022 in comparison to 0.86 in February 2020. A fill rate greater than one indicates employer hiring efficiencies, while a fill rate less than one indicates it is harder for employers to fill vacancies. In the current environment, job seekers are in an advantageous position and there is a negative correlation between fill rate and job openings to job seekers.
There are 4.2 million more US job openings than workers available
Total nonfarm payroll increased by 263,000 over October to November reaching 153.5 million, surpassing the 2019 average of 150,984. Employment gains were up in leisure & hospitality (+88K), and education & health services (+82K), however down in trade, transportation, & utilities (-49K).
Overall, the gains in jobs signal a relatively stable labor market, however the challenge remains in finding ways to fill vacancies through non-traditional recruiting and sourcing methods. There is, however, a paradigm shift in the US labor market as many are not participating in the labor force due to long-term health concerns, caregiving responsibilities, and shifting employment preferences. Employers will need to reassess their recruiting and retention strategies to tap into alternative labor pools and realign incentives to job seekers who are changing preferences.
Globally, labor markets remain stable, however economies remain cautiously optimistic entering 2023
Economies prepare for a global recession due to concerns surrounding inflation, supply chain issues, and ongoing fallout from the geopolitical ramifications of the Ukraine Russia war. Global uncertainty with continued demand for goods and services have impacted global labor markets that are experiencing high vacancies and a limited supply of labor that has faced challenges with long-term health, care giving responsibilities, and dynamic behavioral choices by workers of the world for flexibility and autonomy.
US: Despite the Fed’s tightening monetary policy intended to impact labor markets, the headline unemployment rate remained at 3.7% from October to November, while October’s labor force participation of 62.1% remains below the pre-pandemic level of 63.4%.
UK: Although the unemployment rate slightly increased from 3.5% to 3.6% over October to November, 2.5 million 16- to 64-year-olds remain economically inactive in the summer of 2022 due to long-term sickness according to UK Office for National Statistics.
Canada: The unemployment situation remained steady as the unemployment rate declined by 0.1 percentage points to 5.1% in November, with a record high of working age females 25 to 64 years old employed at 81.6% according to Statistics Canada.
France: The unemployment rate remained stable as it slightly decreased from 7.4% to 7.3% over the past three months, and decreased by 0.1 points from those aged 25 to 49 at 6.5% over the quarter according to INSEE.
Germany: The unemployment rate remained steady over October to November, unchanged at 5.3% amid the energy crisis and ongoing inflation, while underemployment increased accounting to Ukrainian refugees entering the German labor force according to Bundesagentur für Arbeit.
Netherlands: Although the unemployment rate decreased from 3.8% to 3.7% from October to November, the number of people that have entered the labor force YoY has increased by 2.5% according to Statistics Netherlands.
India: The unemployment rate increased from 7.7% to 8.0% over October to November, while the urban unemployment rate increased from 7.2% to 8.9%, and rural unemployment declined from 8.0% to 7.5% during the same period according to CMIE.
Singapore: The unemployment rate slightly increased from 2.0% to 2.1% between 2022 Q2 and 2022 Q3, however the labor force participation increased in 2022 to 70% in comparison to the 2019 pre-pandemic levels of 68% according to Singapore’s Ministry of Manpower.
Brazil: The unemployment rate decreased from 9.3% to 8.7% between 2022 Q2 and 2022 Q3 as more people became employed by the services sector according to the Brazilian Institute of Geography & Statistics.
Global labor markets remain relatively tight as labor force participation slightly increases for non-US countries
Global uncertainty has led job candidates to prioritize different factors when searching for job opportunities
As inflation has globally impacted markets, Radancy job candidates are considering various factors when considering employment opportunities. Using Maslow’s hierarchy of needs as a reference, job candidates consider jobs on six criterion that correspond to Maslow’s hierarchy of needs with respect to basic needs, psychological needs and self-fulfillment needs.
The cost-of-living expenses have caused some job candidates to prioritize compensation and benefits as exhibited in Singapore, India, Canada and the US. Among UK and Brazilian job candidates, convenience was significantly prioritized in the past three months in comparison to compensation and benefits.
In terms of psychological needs, job candidates overall expressed interest in getting ahead in their career in the geographies below except for job candidates in Canada, who also experienced a decline in the prioritization of working with good people. In the previous figure, compensation and benefits were a higher priority over the past three months for job candidates in Canada, which might suggest that basic needs are more important than psychological needs for job candidates in Canada over the recent months. Job candidates in the US, Singapore and India experienced an increase in both psychological need subcategories of getting ahead in their careers and working with good people over the past three months.
Job candidates have also shifted their preferences away from self-fulfillment needs over the past three months. Work that has a greater purpose declined over the past three months except for candidates in the UK, while interesting and challenging was only a priority for job candidates in Canada over the past three months.
Job candidate preferences evolve, and employers will need to continue approaching candidates from a holistic perspective, understanding that a one size solution may not always work.
US separations increase MoM while quits decrease and layoffs increase
Total separations – the summation of quits, layoffs/discharges and other separations increased by 0.3% from September to October, indicative of a cooling labor market with a large MoM change in layoffs/discharges within the accommodation and food services, information, and professional and business services. Firms remain cautious given the ongoing inflation and recession projections for 2023, however economists and forecasters are optimistic that inflation will return to normal levels gradually.
Real-time data shows that job candidates globally prefer remote roles over location-based roles
Job candidates across the world still prefer remote roles for benefits such as flexibility, improved work-life balance, increased autonomy and reduced commuting time. According to Stanford professor Nicholas Bloom’s WFH research, US employees that work from home two days a week can save 70 minutes of commuting time, resulting in 4% more hours worked during a 40-hour week.
Monthly average quit levels and rates remains elevated in traditionally hard to fill industries
As Americans are making holiday travel plans and purchases, industries such as trade, transportation, & utilities, leisure & hospitality, and accommodation & food services continue to experience elevated quit levels and quit rates YoY. Businesses will need to consider a variety of retention incentives outside of traditional monetary incentives such as increased flexibility, or cultural branding that will reduce attrition of their current workforce.
US wages continue to remain below inflation
Transportation & warehousing experienced the largest gain in average hourly earnings YoY, while leisure & hospitality experienced the largest gain in employment levels YoY. Overall, wages remain below inflation as annual nominal wage growth is 5.1% compared to annual inflation, which is at 7.1%.
US employers that consider non-traditional degree candidates will be more successful in attracting talent
Several US employers are considering non-traditional degree candidates for vacancies given the ongoing shortage of candidates including the public sector. The state of Maryland announced a ‘first in the nation’ workforce this past March that would eliminate degree requirements for government positions. Position descriptions that required formal degrees were replaced with skills and experience requirements in collaboration with the nonprofit Opportunity@work. According to the nonprofit’s recent research, over 70 million Americans are skilled through alternative routes (STARs) which includes individuals with either a high school diploma, some college or credentials, however they do not hold a bachelor’s degree.
Among all workers, only 19% of occupations required a bachelor’s degree in comparison to 70% of occupations that required on-the-job training according to the BLS 2022 Occupational Service Requirements Survey.
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