The Great Waiting Game

"The Great Waiting Game"

The Great Waiting Game is a term used right now where both employers and employees are holding out for further evidence of improvement versus speculation of forecasts.?? Businesses are slowing down hiring as a result of underwhelming labor market expectations, and as a result are posting fewer job openings and being pickier with their hires as a result of slower demand and economic uncertainty.?? The uncertainty is mostly focused on the outcome of the presidential election and how quickly the Fed will reduce its benchmark interest rate in the next few months.

In a weaker job market, employees are less likely to quit, which means fewer jobs are opening for people out of work.? A slower pace of hiring can sometimes be a leading indicator of layoffs to come, although there is not any widespread evidence of this yet.?

Here are the August 2024 Job report highlights though an HR lens:

• Employers added 142,000 jobs, up from 89,000 in July. https://www.bls.gov/news.release/empsit.nr0.htm??
• The construction sector led the month’s growth with 34,000 new jobs, higher than the average monthly gain of 19,000 over the prior 12 months.?
• Health care employers added 31,000 jobs in August, about half the average monthly gain of 60,000 over the prior 12 months.?
• Manufacturing employment is down 24,000 jobs.??
• White-collar jobs were neutral last month, with professional and business services adding just 8,000 and IT losing 7,000 jobs.
• Employment in childcare services has grown by only 10,600 jobs over the past 12 months and is not enough to meet demand.
• Retail has lost over 56,000 jobs over the past 12 months, validating that consumer loan growth is slowing, and consumers are becoming more price sensitive.?
• The unemployment rate dropped to 4.2% from 4.3%, which had been the highest level in nearly three years.?? Rising unemployment continues to be driven by more people entering the labor force and having a harder time quickly finding a job.
• Hiring in June and July, though, was revised sharply down by a combined 86,000. July’s job gain was the smallest since the pandemic.
• Average hourly earnings increased by 0.4% for the month and 3.8% from a year ago, both slightly higher than projected estimates.?? Overall quitting and attrition have declined significantly since 2022, which puts downward pressure on wage and salary costs.?? Since the Pandemic ended, wage inflation has been on a steady downward trajectory for two years.?
• The US economy grew at a solid 3% annual pace in the April-June quarter.? The cooling jobs figures underscore why the Federal Reserve is set to cut its key interest rate when it next meets Sept. 17-18, with inflation heading steadily towards its target of 2%. A lower Fed benchmark rate will lead eventually to lower borrowing costs for a range of consumer and business loans, including mortgages, auto loans and credit cards.
• For further reading, The Fed’s?Beige Book, a collection of anecdotes from the 12 regional Fed banks.? The report shows that many employers appeared to have become more selective about whom they hired in July and August.? The report also showed that employers are hesitant to let workers go, meaning retention may be the focus right now.

So, what does this all mean for HR?

• No need to panic.? Even though the labor market is cooling, it still remains historically tight, and job growth is still somewhat strong.?? Know your industry.? Understanding which industries are growing and which are contracting can help guide your talent acquisition strategies. For example, healthcare and construction are still adding jobs, which might offer job opportunities for HR professionals in these sectors.
• Shore up your talent for the fall and increase your hiring competitiveness.? The increase in unemployment means that more candidates are actively seeking work.? However, with lower hiring volumes, finding employment could take longer, and competition for available jobs may intensify.?
• Conduct "Stay Interviews" to help get a feel for where their employees stand on specific issues and overall workplace satisfaction (yes, I understand this could open a can of worms.? But wouldn't you want to know where employees stand either way?).? The magic happens when the stay interview results are acted on, because they will certainly improve engagement and retention in your company.? https://www.shrm.org/topics-tools/news/hr-magazine/how-managers-can-use-stay-interviews-to-improve-retention
• Review compensation strategies.? Talk to your managers and recruiters.? With wage growth slowing, the conversation is less around keeping up with wages and focused more on "getting it right" with the current and impending complexities of compensation structures, job hierarchies, and pay transparency.? Don’t forget Pay Transparency is coming to Illinois 1/1/2025 https://www.jacksonlewis.com/insights/illinois-mandates-pay-transparency-job-postings

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