Too Much Of A Good Thing
Hello and welcome back to the Recruitonomics Newsletter! Today is jobs day and we have some fresh data on employment trends that have big implications for recruiters. Dive in to read more!?
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This Week on Recruitonomics:?
Too Much of a Good Thing??
The U.S. economy added 263,000 jobs in November and the unemployment rate remained steady at 3.7%. Prime-age labor force participation fell last month, to 82.4%, continuing to retreat from the post-pandemic high hit in August 2022. The slumping labor supply is a problem for the persistent labor market imbalance. Wage growth jumped in November, a problem for the Federal Reserve and its goal of price stability. Fed chair Jerome Powell recently remarked on the too-strong nature of recent wage growth – future interest rate hikes will depend on whether these gains return to a level consistent with 2% inflation. These strong wage gains may be too much of a good thing.?
Read the full article here.
What does this mean for recruiters?
To be blunt, this report was a nightmare for recruiters. The impressive gains mean that hiring is obviously not slowing down, despite the reports of tech layoffs and fears of a recession. Simultaneously, the labor force participation rate fell, exasperating the already-aggravating competition for workers. To top it all off, wage growth increased, which might complicate recruiters’ efforts to woo potential employees.
Labor Market Conditions Softening Slowly
The latest job openings and labor turnover survey showed softening conditions in the labor market. Job openings fell to 10.3 million in October, continuing a months-long decreasing trend. Gradual softening suggests that the recent interest rate hikes impacted the labor market in October; construction, a particularly rate-sensitive sector, shed 51,000 openings. However, trends beyond rate hikes influenced the cooling as well – transportation and warehousing is particularly sensitive to the consumer’s shifting spending habits from goods to services. It’s no coincidence the sector’s openings rate fell to 6.4% in October. Of course, these openings are falling from historic highs – there is still more softening to go.
Read the full article here.
What does this mean for recruiters??
We are moving towards a more settled recruitment environment, though very slowly. Recruiters may feel some slight relief lately, but conditions are still overheated. The goal is to bring these openings down to a level consistent with the labor supply. If all goes as hoped, the recruitment environment may, in the long run, return to more normal hiring levels.
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Recruiting Tips:
As last month’s employment data shows, the current uncertainty is not slowing down job creation. In the next year, this is unlikely to change – these uncertainties will probably not lead to a major pullback in hiring. Job openings, though they have come down, still remain at record highs. There is still a lot of recruiting left to be done, and the competition for labor isn’t receding either. The fall in the prime-age labor force participation in November shows recruiting is only going to continue on this difficult path though the new year.?
For more 2023 trends from Appcast, check out Top Recruiting Trends for 2023!
Recently on Recruitonomics:
The world of work is changing. Tight labor markets have transformed the balance of power in the recruiting space in the United States, Germany, and the United Kingdom. A new survey from Appcast, Totaljobs, and StepStone asked workers in three different economies how they view their negotiation power today and in 2030. It turns out that Americans are the most positive about their current position, believing that workers hold more power today compared to companies. Workers in the United Kingdom feel similarly. Workers in Germany, however, believe that companies still hold the majority of the power.?
Read the full article here.
What Recruitonomics is Watching:
In a speech on Wednesday, Federal Reserve Chair Jerome Powell addressed the ongoing fight against inflation, giving hints on where the Fed will go next. He reminded his audience that, despite recent interest rate fluctuations, inflation remains far too high and continues to disrupt the economy. Powell promised that the Fed would continue to raise rates until inflation returns to their 2% goal, though he does expect these hikes to come at a slower pace from this point forward.
Powell highlighted the drop in goods inflation that drove overall price growth at the onset of this inflationary period. His remarks highlighted housing inflation, which has been recently rapid in official measurements but slowing in private company’s estimates. As the official numbers catch up with the rental turnover, housing inflation will slow, bringing the overall rate down with it, Powell remarked.?
As usual, the remarks veered to the still-tight labor market, which remains dangerously unbalanced. Demand is far outpacing supply, which has been dropping since the pandemic. Powell attributes this drop to falling participation among older workers and slowing growth of the working-age population. His remarks showed he still nurses fears of a dreaded wage-price spiral – he called for a rebalancing of demand that would allow for still-strong wage growth more consistent with 2% inflation. In conclusion, Powell reminded his audience that though the road to price stability is long, he intends to complete the journey.?
?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.