U.S. Labor Market Snapshot November 2023

Executive Summary

• The U.S. labor market continues to exhibit mixed signals as job openings increased from 9.4 million to 9.5 million over August to September.
• There were 3.0 million more U.S. job openings than workers available, while labor market tightness measures such as job openings to job seekers remain elevated.
• U.S. wages grew at 4.1% YoY, surpassing annualized inflation growth of 3.2%.
• Workers were more likely to stay at their jobs in professional and business services, financial activities, and manufacturing as quits decreased MoM and YoY in all three industries.
• The U.S. labor force size decreased over September to October from 167.9 million to 167.7 million as? job application fatigue starts to set in.

U.S. labor market is exhibiting mixed signals

Labor force participation decreased from 62.8% to 62.7% over September to October, however it still remains below pre-pandemic levels indicative of other factors which are driving the decrease in labor force participation such as caregiving, access to transportation, and?not wanting to work.

Labor market tightness, which is the job openings to job seekers ratio, continues to remain elevated at 1.5 compared to the pre-pandemic level of 1.2, however it has decreased 11.3% YoY indicating a loosening labor market.

What does this mean for the American Worker?

American workers prioritize a number of factors when considering employers such as autonomy, self-respect, and meaningful work, however pay is a priority as Americans continue to face higher costs of living.?

What does this mean for the American Firm?

American firms will need to readjust their job candidate recruitment and retention processes and policies. The best talent is the one who is agile and open minded. Pedigree resumes might not be the optimal way to fill roles. Firms will also need to prioritize the ongoing challenges American workers face which include caregiving, work arrangements (eg: hybrid, remote), and other non-monetary factors which people value.

U.S. job openings increased from 9.4 million to 9.5 million over August to September, an increase of 0.6% MoM and 4.2% increase in the last three months, while a decrease of 12.0% YoY and over the last two years respectively.

Establishment size classes with 5,000 or more employees tells a different story, as job openings decreased by 16.3%, 8.6%, and 14.3% MoM, over the past three months, and YoY respectively.?

Americans still cite barriers to entering the labor force

The top three factors that have prevented Americans from entering the U.S. labor force according to the U.S. Census Bureau’s Household Pulse Survey outside of retirements continues to include being sick or disabled, caregiving for children, and not wanting to work.

Over the past year, the share of Americans who identified sickness or disability in the U.S. Census Bureau Household Survey as a reason for not working increased from 11.7% to 15.4%. Similarly, the share of Americans who identified caregiving for children as a barrier to entering the labor force increased from 4.4% to 5.4% YoY.?

What does this mean for U.S. Employers? The ability to recruit and retain employees will continue to be a function of whether employers can adjust their expectations regarding work arrangements, eg: hybrid/remote and provide flexibility for working parents and other caregivers given the ongoing shortage of child care workers and healthcare support workers.?

Separations, quits, & layoffs & discharges all decrease MoM?

Total separations – the summation of quits, layoffs/discharges and other separations decreased by 2.8% from August to September, indicative of a cooling labor market.?

Voluntary Attrition

Quits represent voluntary attrition, whereby workers are consciously choosing to leave their employers. Information experienced the largest increase in voluntary attrition MoM by 104.3% followed by retail trade of 15.9% in the same period. Both industries however experienced a decline YoY in quits. Workers were more likely to stay at their jobs in professional and business services, financial activities, and manufacturing as quits decreased MoM and YoY in all three industries.

Outside of compensation, working conditions, purpose of work, and other non-monetary factors are still impacting voluntary attrition rates.?

Involuntary Attrition

Layoffs & discharges represent involuntary attrition. Arts, entertainment, and food services experienced the largest increase in involuntary attrition MoM by 50.0% followed by financial activities at 10.4%. As the U.S. holiday season continues, retail trade experienced an 11.0% and 9.9% decline in layoffs and discharges MoM and YoY respectively.??

Manufacturing experienced a 22.6% increase in layoffs and discharges YoY, however a decline of 16.2% MoM. Although the producer price index for manufacturing declined MoM and YoY, firms are still operating with economic uncertainty which has possibly impacted how labor will be allocated within the manufacturing industry.?

Wage growth remains modest?

Financial Activities experienced the largest gain in average hourly earnings YoY, while education and health services experienced the largest gain in employment levels YoY. Information is the only industry which experienced a decline in employment, however it experienced an increase in average hourly earnings of 1.4% YoY.

According to the Atlanta Federal Reserve Bank’s Wage Tracker, full-time employees, part-time employees, job switchers, and hourly workers all experienced a decline in median wage YoY in comparison to not paid hourly workers. The small gains in median wage growth reflect a loosening labor market where employers are reducing costs through compensation strategies. Workers are managing their incomes through various smoothing mechanisms such as reduced consumption and seeking additional part-time work outside their full-time jobs.?

Americans are actively adjusting their expectations to meet this new inflationary environment with respect to work, leisure, and spending. The personal savings rate as of September 2023 is 3.4%, which has decreased by 52.7% since September 2021.

The personal savings rate declined by 15.0% MoM, while the percent of those employed with multiple jobs increased by 5.2% during the same period.

According to the most recent U.S. Household Pulse Survey, 41.1% of Americans are leveraging regular income sources to meet their spending needs, followed by 19.4% who are using credit cards or loans to meet their spending needs.?

Prime age workers continue to experience the effects of layoffs, inflation, and ongoing economic uncertainty. Americans are seeking secondary employment outside primary employment and are cautiously monitoring their discretionary spending.