Well, the job market is looking more like the healthy but boring era of 2018 or 2019, Nick Bunker, director of North America economic research at the Indeed Hiring Lab, told Business Insider. This contrasts with the wild fluctuations we have seen during the COVID-19 pandemic.
Bunker said we’re seeing less drama in employment data.
“It’s a good thing in my opinion,” Bunker said, given what has been an “incredibly dramatic” few years.
However, employment growth remains excellent; the United States just added 303,000 jobs in March, although that’s a slower pace than at the height of the pandemic recovery.
Wage growth has slowed. The share of Americans working or looking for work has remained broadly stable since spring 2023. Job openings have also declined – and have stood at a rate of 5.3% for three straight months. The number of layoffs and layoffs has been low.
And this duller but stable job market could be great news for workers and job seekers. Julia Pollak, chief economist at ZipRecruiter, told Business Insider that small changes are important in a resilient, stable and robust labor market.
“Everything is going better than most people predicted,” Pollak said.
Pollak highlighted strong employment in the construction and manufacturing sectors. Construction employment in March was 7.8% higher than the pre-pandemic level of February 2020. Manufacturing employment was 1.4% higher and its employment remained unchanged between last February and last March.
The much-feared recession that followed the wild swings of the early pandemic years has not yet emerged and may not even be on the horizon. “I think stability in an era of high interest rates and tight monetary policy that are expected to lead to losses and declines is something worth celebrating,” Pollak said. “And most of the recent small changes are going in the right direction.”
The United States could find itself in a Goldilocks labor market. The four charts below show what this looks like.
Quit your job
People looking for a new Workers have bargaining power, but workers are more likely to stay in their current job.
“Job seekers still have some bargaining power but are less willing to demonstrate that power by leaving their jobs,” Bunker said. “With fewer new job opportunities and less pay raise for changing roles, more employees are staying put. However, layoff rates are still low, so workers enjoy solid job security compared to pre-pandemic levels.
Newly released data for February shows that the resignation rate in the United States was 2.2% for four consecutive months. This rate has calmed from 3.0% in April 2022. There were 3.5 million resignations in February, and the BLS press release noted that this measure “has changed little.”
Wage growth
The average hourly wage increased 4.1% between March 2023 and last March, which is lower than the year-over-year increase of around 6% in March 2022.
Despite this slowdown, wages have recently risen faster than prices, meaning workers have greater purchasing power.
“That means real money in the pockets of working families,” Acting Labor Secretary Julie Su told Business Insider. “That’s exactly what we would like to see.”
March inflation, measured by the year-over-year percentage change in the consumer price index, rose slightly last month but remains less of a problem than last year. It climbed 3.5% from March 2023 to March 2024, compared to an increase of 3.2% from February 2023 to February 2024.
Given moderating wage growth, the Fed may be more inclined to cut interest rates later this year. Pollak said the slowdown in wage growth was “good news for a Fed that continues to battle inflation.”
People who change jobs experience higher wage growth than people who stay, according to the 12-month moving average of median wage growth from the Atlanta Fed’s Wage Growth Tracker. However, wage growth slowed in both cases. those who change jobs and those who stay.
“Nominal wage growth may have slowed, but real wage growth – which is what really matters for workers’ purchasing power – remains positive and high,” Pollak told BI. “Job changers and current workers are still experiencing solid real wage growth and have clearly retained much of the leverage gained during the pandemic. They are recruited, negotiate their job offers and receive counter-offers from the former employer who intends to keep them at a historically high level. rates.”
Unemployment insurance claims
Initial unemployment insurance claims can be a useful indicator when it comes to layoffs, increasing when many people lose their jobs. Right now, the boring rate of these first-time benefits claims suggests that large-scale layoffs have yet to materialize.
Initial claims decreased between the week ending March 30 and the week ending April 6. In general, initial claims have been low so far this year compared to the high level of weekly claims during the pandemic.
“Even though there is much speculation about a slowdown in employment, recent numbers, including job openings as well as initial jobless claims, continue to indicate that the U.S. labor market has remained stable ” said Eugenio Alemán, chief economist at Raymond James, in a statement. a note earlier this month.
Unemployment
In January 2021, the unemployment rate was 6.4% after soaring to double digits during the pandemic shutdowns in spring 2020. It calmed to 3.8% last March, just above the historically low rates observed for most of the last two years.
Furthermore, the number of people who moved from employed to unemployed did not change too radically; that number was around 1.5 million for each of the last few months.
So what will happen to the Goldilocks job market?
“It would be nice to live in a world where unemployment is low, wages are rising steadily and more people are entering the workforce,” Bunker said. “So I hope, fingers crossed, that the dramatic days are behind us and that we can see significant gains for workers, for job seekers. But not in a way that seems disconcerted.”
Even though openings, wage growth and hiring rates have slowed, the job market as a whole can be described as more Goldilocks-like, neither too hot nor too cold.
“It’s a job market that’s strong, and there’s a path forward for it to continue to grow sustainably,” Bunker said.
Juliana Kaplan contributed reporting.
businessinsider
