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March 2023 Global Labor Market Update

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  • The US labor market is showing signs of softening, as job openings decreased from 11.2 to 10.8 million over December 2022 to January 2023.
  • There were 4.8 million more US job openings than workers available, while labor market tightness measures such as job openings to job seekers remain elevated.
  • As of March 2023, Radancy’s network of data shows that job candidates in the UK valued convenience and getting ahead in one’s career as primary factors when considering job opportunities.
  • US wages remain below inflation, as annual nominal wage growth is 4.6% compared to annual inflation, which is at 6.0%.
  • As of March 2023, Radancy’s network of data shows that job candidates in the Netherlands valued mission and purpose when considering factors that make an employer attractive.
  • The share of unemployed Americans who took less than 5 weeks to find a job increased by 5.5% between February 2020 and February 2023.

US labor market remains relatively tight despite relatively high job opening levels     

US job openings decreased from 11.2 to 10.8 million over December 2022 to January 2023, a decrease of 3.6% MoM; however, there was an increase of 3.4% over the past three months, indicative of a gradually cooling labor market that remains relatively tight despite concerns over a looming US recession. There were 4.8 million more job openings than workers available, a slight decrease from the previous month of 5.5 million.

US labor market tightness measure remains elevated

The job openings to job seekers ratio, which is one of the measures to assess the labor market tightness, continues to remain elevated at 1.9, compared to the pre-pandemic level of 1.2. The ratio of job openings to job seekers has increased by 55.1% since pre-pandemic days.

US job gains remain elevated  

Total nonfarm payroll increased by 311,000 over January to February, reaching 155.3 million and surpassing the 2019 average of 150,984. Employment gains were up in leisure & hospitality (+105K) and retail trade (+50K), but down in information (-25K).

Overall, the gains in jobs signal a persistently strong labor market, as total nonfarm payroll has increased by 8.7% over the past two years.

Globally, job candidates have different timelines for finding new jobs

Radancy job candidates are considering various factors which make an employer attractive, such as mission & purpose, potential for professional development, products/services, and culture. Radancy’s network of data shows that as of March 2023, candidates in the Netherlands reported the largest percentage of those who valued mission and purpose, followed by candidates in Brazil and France. Candidates in the UK valued products/services at much higher percentage in comparison to other European countries such as Germany, France, and the Netherlands during the same period.

US separations increase MoM while quits decrease and layoffs increase   

Total separations – the summation of quits, layoffs/discharges and other separations – has increased by 1.0% over the last three months, while layoffs/discharges have increased by 12.5% over the same time. In terms of industry, professional and business services experienced the largest increase in layoffs/discharges MoM, while retail trade experienced the largest increase over the past three months.

Globally, job candidates prioritize several factors when considering opportunities

Radancy’s network of data as of March 2023 shows that job candidates across the world are motivated by several factors. In the UK, convenience and getting ahead in one’s career were factors that experienced the largest growth among job candidates. Job candidates in India prioritized getting ahead in one’s career followed by interesting and challenging work when considering employment opportunities.

Americans are still optimistic about finding a job over the next few months

The New York Federal Reserve Bank’s most recent Consumer Expectations survey reported that Americans’ mean probability of finding a job in the next three months is 57.9%, slightly lower than the pre-pandemic percentage of 58.6%. Despite the challenges of worker attrition and concerns regarding long-term covid, Radancy’s network of data shows that the percentage of US job applicants who suggest they are ready to make a change today is up 3.8% YoY.

US wages continue to remain below inflation

Over the past year, leisure & hospitality experienced the largest gain in average hourly earnings and employment, while retail trade experienced no change in employment; however, there was a 5% growth in average hourly earnings. Overall, wages remain below inflation, as annual nominal wage growth is 4.6% compared to annual inflation, which is at 6.0%.

Monetary policy’s impact on labor markets

Over the past twelve months, the Federal Reserve has increased the federal funds rate to reach the target inflation rate of 2%; however, this has impacted aggregate demand, resulting in a decline of consumer spending and making it more expensive for consumers to purchase large-ticket items such as houses and cars. Furthermore, higher interest rates have reduced business investment, creating risk aversion in current and future investment and hiring. This uncertainty has resulted in businesses reducing hiring and available vacancies, leading to a higher unemployment rate. The inverse relationship between inflation and unemployment, known as the Phillips curve, is evident in the recent data released from the BLS.

Although the US unemployment rate increased by 0.1% MoM, the share of unemployed Americans who took less than 5 weeks to find a job increased by 12.7% MoM; however, it decreased for those who took 5 to 14 weeks to find a job by 1.0% MoM. Comparing the numbers to pre-pandemic levels, the share of unemployed Americans who took less than 5 weeks to find a job increased by 5.5% between February 2020 and February 2023, while the share of those unemployed 27 weeks and over declined by 8.3%.

What does this mean for employers?

A higher unemployment rate indicates that more Americans without a job are actively looking for a job, resulting in a larger pool of applicants that are available for employers; however, there are still 99.8 million Americans not in the labor force. The most recent US Census Household Pulse Survey reported that outside of retirements, 10.2% of surveyed Americans reported sickness or disability as a reason for not working, followed by 5.2% citing caregiving of children not in school or daycare, and 4.9% not wanting to be employed at the time.

Employers will need to recognize that different incentives will be required to induce Americans to return to the workforce. Beyond compensation and benefits, providing options for remote work, flexibility, and autonomy will be important drivers in attracting people back to the labor force.

 

About Radancy

Radancy is the leading cloud-based talent acquisition software provider intelligently solving the most critical challenges for enterprises globally and delivering cost-efficient outcomes that strengthen their organizations. The Radancy Talent Acquisition Cloud, powered by rich data and deep industry insights, optimizes the entire candidate journey, enabling enterprises to hire the most qualified talent faster, while reducing costs and driving higher ROI, recruiter efficiency and an improved candidate experience.

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