- The US labor market is showing signs of softening as job openings decreased from 10.5 to 9.9 million over January 2023 to February 2023
- There were 3.9 million more US job openings than workers available, while labor market tightness measures such as the job openings to job seekers ratio decreased from 1.9 to 1.7
- As of April 2023, job candidates in seven out of nine countries that Radancy has global offices prioritized compensation and benefits as a factor when considering job opportunities
- US wages remain below inflation as annual nominal wage growth is 4.2% compared to annual inflation which is at 5.0%
- Radancy’s network of data as of March 2023 shows that job candidates in the Netherlands considered working with the right people important over the past three months in comparison to candidates in the US over the same period
- Multiple jobholders have increased by 0.9% and 8.4% MoM and YoY respectively
US labor market seems to be gradually cooling
US job openings decreased from 10.5 to 9.9 million over January 2023 to February 2023, a decrease of 6.0% MoM, and a decrease of 7.6% over the past three months indicative of a gradually cooling labor market. There were 3.9 million more job openings than workers available, a slight decrease from the previous month of 4.8 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 1.7 compared to the pre-pandemic level of 1.2. The ratio of job openings to job seekers has increased by 41.6% since pre-pandemic days.
US job gains remain elevated
Total nonfarm payroll increased by 236,000 over February to March, reaching 155.5 million, surpassing the 2019 average of 150,984. Employment gains were up in leisure & hospitality (+72K) and government (+47K), however down in warehousing and storage (-12K).
Overall, the gains in jobs signal a competitive labor market, as total nonfarm payroll has increased by 2.6% over the past year.
Globally, job candidates consider different factors when searching for opportunities
Radancy job candidates are considering various factors when searching opportunities. The six factors have been divided into the following:
- Basic Needs: Convenience and compensation/benefits
- Psychological Needs: Good people to work with and getting ahead in my career
- Self-Fulfillment Needs: Work that has greater purpose and interesting/challenging work
As of March 2023, job candidates in seven out of nine countries that Radancy has global offices prioritized compensation and benefits as a factor when considering job opportunities, however job candidates in the Netherlands considered convenience over compensation and benefits, while job candidates in the UK reported equal preference to both convenience and compensation and benefits. In terms of psychological needs, getting ahead in their career was considered a higher priority over good people to work for job candidates in all reported countries, especially in India, Brazil and the UK. Finally, interesting and challenging work was considered more important than work with a greater purpose among job candidates in all reported countries, with Netherlands leading the way.
US separations decline YoY while quits decrease and layoffs increase
Total separations – the summation of quits, layoffs/discharges and other separations has decreased by 2.1% over the last three months. Layoffs/discharges represent involuntary attrition and have increased by 1.3%. Quits represent voluntary attrition and have decreased by 3% over the same time, indicative of job candidates acting more risk averse in the labor market.
In terms of industry, information experienced the largest increase in layoffs/discharges MoM, while retail trade experienced the largest increase over the past three months.
What is most important to job candidates over the past three months includes the right company, people and job
Radancy’s network of data as of March 2023 shows that job candidates across the world consider the right company, people and job when evaluating job opportunities. Over the past three months, job candidates in the US and India were ranked in the same order in terms of being with the right company and having the right job. Job candidates in the Netherlands considered working with the right people important over the past three months in comparison to candidates in the US over the same period.
Americans are a bit more risk averse about the labor market
The New York Federal Reserve Bank’s Consumer Expectations’ most recent survey reported that Americans’ mean probability of finding a job in the next three months if one loses a job today is 57.6%, a slight decline of 0.5% MoM. Although unemployment remains low, the mean probability among Americans that the US unemployment rate will be higher one year from now is 40.6%, which represents an increase of 3.4% MoM.
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 a decline in employment of -0.1% YoY, however a 4.1% growth in average hourly earnings YoY. Overall, wages remain below inflation as annual nominal wage growth is 4.2% compared to annual inflation, which is at 5.0%.
Inflation’s impact on stress
Over the past twelve months, the Federal Reserve has increased interest rates in attempt to decrease inflation. US annualized inflation is at 5.0%, however prices remain elevated. According to the most recent US Census Household Pulse Survey, 46% of surveyed Americans reported that an increase in prices was very stressful in comparison to 5.2% that did not report any stress in response to an increase in prices.
Multiple jobholders have increased by 0.9% and 8.4% MoM and YoY respectively.
According to the most recent US Census Household Pulse Survey, Americans are modifying their behavior in several ways to cope with changes in prices. The number one behavioral modification is to shop at stores that offer lower prices and/or use coupons, essentially the substitution effect.
What does this mean for employers?
The cost of living will always remain a concern for job candidates. Employers need to recognize that talent recruitment and retention is a function of many factors outside of pay including culture, purpose and other non-monetary factors.
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