Labor Market Analysis & Trends
The US labor market has witnessed huge changes in the past two years. Severely affected by the pandemic, the market has unemployment of 2.9 million, with a total of 158.4 million employed workers,1.8% below the pre-pandemic rate. The unprecedented shortage of labor continues to weigh down the US economy as the labor market persists to be tight with an unemployment rate of 3.7% in August, preceded by a 3.5% rate in July; This marks the lowest unemployment rate since the 70s. The labor force participation rate (LFPR) is 62.4% with the addition of 786,000 new workers. This shows overall growth which may increase hiring efforts due to the rising workforce and addition of available candidates to talent pools. . The overall unemployment rate may have risen, but the degreed worker’s rate has decreased to 1.9% reflecting the lowest rate since 2006.
This triggered job loss on such a high scale has never been recorded since the Great Depression, although the recovery of the market is more perplexing. Ample job vacancies are devoid of enough workers to fill them. With continuous slack in the US economy, the labor market has also seen 163,000 more civilians in the labor force. The layoffs have increased by 6.6% in the past three months and the quitting rates have decreased by 3.4%; however, the Great Resignation remains a major issue for companies. The quit rate elevated by 8.8% MoM for professional and business activities and 6.2% MoM for financial activities. Other sectors like leisure and hospitality, accommodation and food services, arts, and entertainment and relations remain the same for MoM, but decreased for YoY. The deterioration of quit rates happens due to the increase in average hourly compensation. Total job openings recorded in July are 11.2 million, marking the increase of 1.8% MoM & 4.2% YoY though the hiring ratio remains the same at 1.7%. Sectors with job openings are warehousing and utilities (81K+) , transportation, arts, entertainment and recreation (53K+), federal and local education (47K+) and durable goods manufacturing (42K+).
There are 68% of companies (all sizes) who plan to continue staffing up for the upcoming 6 months to keep pace with the competitive market for top talent; This includes the great partake of midsize companies (78%) and small companies (40%). The roles of skilled IT (Information Technology), networking, data science and analysis have acute demand along with difficulty in hiring. Employers are increasingly relying on the use of remote freelancers in companies. In 2021, freelance jobs were done by 36% of the US workforce and currently another 20% of Americans are working as freelancers. These professionals are found to be more skilled and educated. The key element of this trend is driven by the flexibility and location of the job role. It is analyzed that midsize companies will use remote freelancers the most.
Overall, 36% of freelancers are responsible to perform 19% of work in which the tech roles are the highest. Currently, this majority is composed of postgraduates with skilled services like marketing, IT, and business consulting.
The future of talent strategy relies on the leverage of independent professionals. Post-pandemic, people are still looking to remote work and prefer these jobs accordingly. 43% of the fully on-site workforce, 21% hybrid, and 37% fully remote. It is observed that small companies are embracing the remote work trend the most (33%). Turnover has been a significant area of concern for the US labor market as retention is still increasing, leading to more turnover troubles. As per the Bureau of Labor Statistics, more than 47 million Americans quit their jobs last year, which is the most resignations on record. There is a significant impact on all the companies; midsize companies specifically endure the highest turnover. Employers are taking key steps to retain the staff. The new hiring trends adopted by employers consist of emphasizing more on strengthening the work culture, salary hikes as an effective way to retain the staff and expanding the scope of allowing greater flexibility. Personal training, coaching, and changing the way to measure productivity, along with the added staff, also fall under these new hiring trends
Considering the overall economy, the trends that impact hiring consist of the essential return of private employment to pre-pandemic levels; However, the economy’s ideal state is yet to be achieved. The labor market has job openings that exceeded the available number of unemployed job seekers, which results in weak labor force participation. The viewpoint economists have is more likely to disagree with the potential and prospect impact of the recession, and their replies to those fears have varied across employers and industries. The recovery of the supply chain is the desperate need for an hour. This further highlights the need for the companies to evolve and innovate alongside the latest trends in the US Labor market. The workforce is seeking more than a high compensation, but a position with big opportunities, flexibility, and learning new values and skills.