There is No One Labor Market, As These States Show
Hello and welcome back to the Recruitonomics Newsletter! This week, we’re looking into state recession outlooks within the U.S. and Canada’s latest labor market data.?
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This Week on Recruitonomics:?
How Would We Know if a State is in a Recession?
Pinpointing when the U.S. enters a recession is dicey enough but knowing when a state is in a recession seems nearly impossible. For the United States on a whole, the National Bureau of Economic Research’s business cycle committee decides when the U.S. enters a recession but these recession calls are famously delayed. Researchers have begun using inventive methods to try to get a quicker answer to the important question of whether or not we are in a recession. Claudia Sahm, a former Fed economist, created the Sahm rule, which tracks the unemployment rate and flags a certain percentage point increase as a recession indicator. While the Sahm rule is powerful for national recessions, its insights do not extend to the state-level. State unemployment rates are far more volatile. So, if not the Sahm rule, then what? The Philadelphia Federal Reserve has devised an econometric model that helps determine whether or not a state is in a recession. They call it the State Coincident Index (SCI), which is based on the following monthly economic variables for each state: employment and unemployment, average hours worked in manufacturing, and wage and salary data (deflated by inflation). In the long run, the SCI is basically a measure of each state’s economic output – demonstrating when it is expanding or contracting.
Read the full article here.
What does this mean for recruiters??
As this piece proves, there is definitely not one labor market. Each state has different economic outlooks that often differ from the nationwide economy. For recruiters, this means looking at the actual areas they are recruiting in matters: You may see far different recruiting outcomes in say, Utah, than Michigan.?
Canada's Labor Market Takes One Step Forward, Two Steps Back
Last Friday, we learned the Canadian labor market expanded in January, adding 37,300 net new jobs. After several months of sluggish growth, these gains were welcome news but there were some concerning details within the report. First, the majority of growth in the headline number was from an increase in part-time employment (+49k). Full-time employment fell by nearly 12,000 jobs (-11.6k), a concerning signal about the demand for hiring. This could potentially suggest a shift towards less-stable employment conditions, undoing several years’ worth of gains of full-time work. Second, the overall demand for workers has fallen across all major industries in Canada. The job vacancy rate has fallen sharply in construction, manufacturing, and retail.
Read the full article here.
What does this mean for recruiters??
In the end, this is a mixed report, full of shifting job market dynamics that will require strategic hiring decisions in 2024. Even in a more slack labor market, some roles will continue to be difficult to recruit for. Understanding the ins and outs of the demand for your specific roles will help you create realistic expectations.?
Recruiting Tips:?
In case you missed it last week, our quarterly Labor Market Snapshots are now live! This quarter, we looked at the enduring demand in the healthcare sector, the potential rebound for the tech industry, the revival of the manufacturing sector following strikes in the second half of 2023, and more! Download the snapshot for your industry today:?
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Recently on Recruitonomics:
Economic data has been coming in strong for some time now: Labor market fundamentals are enviable, inflation is cooling and GDP growth has been solid. If you ask a consumer how they feel about the economy, they should report positive sentiment, right? Not exactly. Consumers are feeling incredibly pessimistic about the economic outlook, according to two key measures of consumer sentiment, the Survey of Consumers from the University of Michigan and the Consumer Confidence Survey from the Conference Board . This mismatch between vibes and reality has been dubbed the “vibecession.” The danger of these bad vibes is that it might cause consumers to tighten their purse strings, leading to a recession (this gloomy outcome did not come to fruition in 2023, which saw consumers continue to spend strongly, aiding strong growth). So what has caused this “vibecession,” this dissonance around economic truth? It’s tempting to immediately blame inflation: Despite its cooling trend, prices are still far higher than they were pre-pandemic. But considering a simple model that incorporates the inflation rate, unemployment rate, and nominal wage growth and historically tracks with consumer sentiment, both sentiment measures are still far lower than expected. Adjusting the model to include the three-year inflation rate reduces, but does not totally eliminate, the gap between expected and actual sentiment. So, while higher price levels can partially explain the low vibes, they are not the complete reason why consumers feel so low. What else can explain the vibecession? Sam Kuhn and Julius Probst, PhD explore.?
Read the full article here.
What Recruitonomics is Reading:
It wasn’t just a “hot labor summer:” worker stoppages occurred throughout all of 2023! In a new report, researchers at Cornell University’s ILR school and the University of Illinois’ LER school go in-depth on the labor action trends last year. As the official BLS data only tracks strikes with over 1,000 workers, this data helps give a more complete picture of the increasing strike activity over the last few years. It was a memorable year for organized labor, with attention-grabbing strikes from SAG-AFTRA, Kaiser Permanente, and United Auto Workers. These three organized strikes, including another by educators within the Los Angeles School District, included around 65% of striking workers in 2023! While strike activity has been increasing since 2021, it still comes nowhere near the activity seen in unions’ heyday in the 1970s and earlier.?
?More Data & Insights:
Thank you for reading! Stay tuned for next week's Recruitonomics Newsletter and check out Recruitonomics.com for more data-driven insights.