Job Market Trends

People who are worried that the economy is headed into a recession have received some encouraging news. The Labor Department reports that the U.S. economy added 528,000 jobs in July, dropping the unemployment rate to 3.5%. Normally in a recession, the economy sheds jobs.

According to the government report, job growth was widespread across the economy. The sectors of leisure and hospitality, professional and business services, and health care saw the biggest gains. Government economists say the employment picture has now returned to the way it was just before the start of the COVID-19 pandemic.

The number of long-term unemployed – those out of work for 27 weeks or more – decreased by 269,000 in July to 1.1 million, which was what it was just before the start of the pandemic. The long-term unemployed accounted for 18.9% of those who were out of work in July. 

The labor force participation rate, at 62.1%, and the employment-population ratio, at 60.0%, were little changed over the month. Both measures remain below their February 2020, levels.

Restaurants were finally able to staff up

Leisure and hospitality added 96,000 jobs in July, as growth continued in food services and drinking places. However, employers in this sector continue to struggle to find workers. Employment in leisure and hospitality is below its February 2020, level by 1.2 million, or 7.1%.

There was also a lot of hiring last month in the professional and business services sector, which added 89,000 jobs. The new hires were widespread within the industry, including gains in the management of companies and enterprises, architectural and engineering services, management and technical consulting services, and scientific research and development services. Employment in this sector is 986,000 higher than in February 2020.

After struggling to fill open slots in early 2022, the health care sector saw strong job growth, adding 70,000 jobs in July. Job gains occurred in ambulatory health care services, hospitals, and nursing and residential care facilities. However, jobs in health care remain below their pre-pandemic levels.

The Fed is likely to keep raising rates

While the numbers are good news for people looking for jobs, the Federal Reserve may look at it differently. Its policy of raising a key interest rate is aimed at slowing the economy to tamp down inflation.

The July jobs report suggests that the economy isn’t slowing that much, meaning the Fed is unlikely to take its foot off the brake anytime soon. As for inflation, the government will shed some light on that problem when it issues the Consumer Price Index (CPI) for July last week.

The CPI, a measure of inflation, was increasing at a 9% annual rate in June, the highest increase rate since 1982.

If you find yourself living paycheck to paycheck, then you’re in good company. A new report from LendingClub shows that 61% of the population spends most of its money between paydays.

In 2021, the number of people struggling to make ends meet rose 7% from June to December, a period in which enhanced unemployment benefits ended. Challenges were also present on the upper end of the pay scale. Researchers found that 42% of U.S. consumers earning more than $100,000 annually now live paycheck to paycheck as well, an increase of three percentage points from May 2021.

People earning less than $50,000 faced the biggest financial challenges last year, with 77% of that group living paycheck to paycheck. In many cases, debt is a major reason.

Rita, of Tularosa, N.M., found herself deep in debt before she got help from Freedom Debt Relief.

“I used to worry about making it from paycheck to paycheck,” Rita wrote in a ConsumerAffairs review. “Now, I'm able to afford groceries again, and not make one meal stretch into three meals.”

Especially hard on millennials

The LendingClub report found that millennials, many raising young families, are the most likely demographic to be juggling finances. However, the biggest increase in the share of consumers living paycheck to paycheck is seen among baby boomers and seniors.

In December 2021, 54% of baby boomers and seniors were living paycheck to paycheck, up from 40% in May.

In addition to debt, being overextended on monthly bills is a major reason why many people are living paycheck to paycheck. The report found that consumers who can manage their bills are able to regularly add to savings, while others are not.

With no savings, paying for an emergency expense usually puts paycheck to paycheck households in debt. At 59%, Generation Z consumers who live paycheck to paycheck and have issues paying their bills are the most likely to be unable to afford a $400 emergency expense, the report found. 

If you’re looking for a job right now, you just might be in the minority. New data from the Labor Department shows that there were 4.6 million more job openings in December than people seeking to fill them.

There were fewer people quitting jobs at the end of the year, but employers increased their search for workers as the economy continued to bounce back from early lows during the pandemic. There were 10.9 million job openings on the last business day of December, the government reported.

In December, the number of hires decreased to 6.3 million, a decline of 330,000. The hiring rate was little changed at 4.2%.

The situation has apparently been building for several months. In August, Tyler, of Cedar Park, Texas, told us that he has seen the difference when using Ziprecruiter to find employees.

“Last year I had 50 job openings posted and in 5 days got over 350 applicants,” he wrote in a ConsumerAffairs review. “The same jobs posted for the same time period this year and I have 37 applicants, 1/10th of what they did last year. Eighteen of the ads have been viewed by no one!”

Tyler’s review suggested the fault lay with Ziprecruiter. However, in light of millions of people quitting jobs and not seeking new ones, there may be other reasons for his lack of response.

More jobs, fewer applicants

As businesses fight for fewer and fewer people looking for work, job security is increasing. The Labor Department report shows that layoffs and firings plunged to 1.17 million, a nearly 11% decline from November. It’s a decline of nearly 36% from December 2020, a record low.

“Given the trouble that businesses are having in finding and attracting new hires, employers are hanging onto the workers they’ve got,” Sinem Buber, the lead economist at ZipRecruiter, told CNBC.

The only good news for businesses appeared to be a slowdown in the “Great Resignation” in December. The number of people turning in their resignation declined by 161,000 to 4.3 million.

Even so, millions of jobs remained unfilled. Job openings increased in several industries, with the largest increases at hotels and restaurants that were seeking a combined 133,000 new employees.

It looks like hourly wage workers could be in for a good 2022 if a new report on salary budgets comes true. According to the latest Conference Board Salary Increase Budget Survey, a 3.9% jump in wage costs for firms is expected next year. Hitting that prediction would make the wage increase in 2022 the highest since 2008. 

The report suggests that growth in wages for new hires is the main driver. Almost half of the respondents (46%) said the increase in wages of new hires played a factor in salary increase budgets for 2022, while 39% said the bump in inflation was the defining factor.

Workers under the age of 25 and people who changed jobs in the past year are the real winners in the wage hike game. 

“The faster wage growth of new hires has led to pay compression, which is when wage premiums for work experience shrinks,” said Gad Levanon, the founder of the Labor Market Institute and in charge of the Help Wanted OnLine program for The Conference Board. 

“When more experienced workers feel that their pay advantage is no longer significant, they may seek new jobs in the tight labor market, which leads to high labor turnover of more experienced workers. Indeed, the quits rate is now the highest in recorded history. Employers faced with extensive departures of experienced workers will raise wages faster for current employees in order to maintain an effective workforce.”

Does this mean the Great Resignation is over?

Will rising wages stem the flow of resignations or accelerate job-hopping? Ira Wolfe, President and Chief Googlization Officer at Success Performance Solutions, said yes and no.

“Throwing money at the problem is not a long-term solution,” Wolfe told ConsumerAffairs. “For some jobs, it's simply supply and demand. Companies will dangle money to entice scarce top talent to flip jobs. For other jobs, it's strictly doing what it takes to attract warm bodies to fill positions. But in neither case, does that address resignation, turnover, brain drain, and morale especially at the front line.”

Wolfe cited the example of his granddaughter, who has been working part-time for a grocery store while going to school. After five years, Wolfe said she makes $12 per hour, the same wage that new hires are making. So, what did she do? She resigned to accept a job for several dollars more. 

“Raising wages to attract new talent also requires raising wages significantly for current employees, otherwise, they will leave. Replacements will come with a higher price tag and less loyalty - a terrible trade-off and bad business decision,” Wolfe said.

“Wages also don't address the #1 and #2 worker demands - flexibility and purpose. In other words, will wages rise? Yes. Will it open a pandora's box without proactively and aggressively addressing pay equity, compensation, benefits, company culture, and employment brand? Absolutely.”

On the heels of very strong job growth in October, the Labor Department reports that the economy produced only 210,000 jobs in November, far fewer than most economists expected.

After businesses reported 546,000 new hires in October, many economists expected the same or even more in the following month. But despite the lower-than-expected number, economist Joel Naroff, president of Naroff Economics, says the numbers also show that the economy is still recovering and growing strongly.  

“The issues in the labor market are likely more the result of a lack of workers than a slowdown in hiring,” Naroff told ConsumerAffairs. “Thus, seasonal hiring in the retail and hospitality sectors were less than expected. That should not have been a real surprise. In addition, health care and education were soft. This is a part of the economy where skilled workers are in extreme short supply, which appears to be limiting hiring.”

Naroff focuses on the unemployment rate. In November, it dropped sharply to 4.2%. He says that dip shows that people looking for work are finding it.  

“The jobs numbers bounce around, but the expectation of 500,000 new people on the payrolls was and remains unrealistic given the lack of labor,” Naroff said. “Numbers in the 200,000 to 300,000 range seem to be more reasonable.”

Fewer people are out of work

The report shows that the number of unemployed persons didn’t increase last month. In fact, they fell by 542,000, to 6.9 million. In February 2020, just before the pandemic, the unemployment rate was 3.5%, with 5.7 million people out of work.

People looking for jobs in business and professional services last month had the best chance of being hired. That sector added 90,000 jobs in November. 

With supply chain bottlenecks, the transportation and warehousing sector was busy, hiring 50,000 people last month. Demand for truck drivers remains greater than the number of people applying for those jobs.

On the flip side, retailers reduced their hiring, perhaps because they staffed up in September and October ahead of the holidays. The retail sector lost 20,000 jobs last month.

People who did get jobs last month earned slightly more money. Average hourly incomes in November increased by eight cents to $31.03. Over the past 12 months, average hourly earnings have increased by 4.8 percent. 

The job market has shown its topsy-turvy side again. A new report from the U.S. Bureau of Labor Statistics published on Tuesday shows that while the total number of job openings actually declined in August, a record 4.3 million workers actually quit their jobs.

Following a high in July, the number of job openings declined to 10.4 million on the last business day of August. Hires decreased to 6.3 million and separations held steady at around 6 million. 

Breaking down the separations metric, the total number and rate changed very little, but there was a lot of movement in the accommodation and food services sectors, where 203,000 retired, quit, or lost their jobs. Hiring improved in state and local government including education (+57,000). 

Job openings and hiring trends

Regulators said the industry sectors where job openings decreased the most were in health care and social assistance (-224,000) and accommodation and food services (-178,000).

When those jobs were actually filled, the Top 5 category hires overall in August came from:

1. Leisure and Hospitality: 1.4 million

2. Trade, transportation, and utilities: 1.37 million

3. Accommodation and food services: 1.26 million

4. Professional and business services: 1.26 million

5. Retail trade: 857,000

For people looking for work, the federal government looks like a good opportunity. Overall, there were 142,000 federal job openings and 45,000 hires in August.

The southern U.S. also appears to be a good place to look for work. There were 2.5 million hires and 4 million job openings in the South vs. the other three geographical regions, which had about half of that.

The Labor Department said Monday that the number of job openings in the U.S. exceeded 10 million in June. The figure topped economists’ expectations of 9.1 million openings and broke a previous record. 

In May, the number of job openings was 9.5 million. The Labor Department said in its Job Openings and Labor Turnover (JOLTS) survey that the increase suggests that demand for workers is still on the rise. Officials say it also means the economy is bouncing back from last year’s COVID-19 shutdowns.

Broken down by sector, retail trade leisure and hospitality saw one of the biggest jumps in job openings, at more than 1.6 million. Health care and social assistance had 1.5 million job postings in June. Accommodation and food services added 121,000 new openings.

“Labor demand keeps getting stronger. This is the third straight month of record-breaking job openings,” Indeed Hiring Lab director of research Nick Bunker said in a note. “The quits rate is also close to its all-time high, which was set just two months ago in April. This wave of demand will eventually recede, but job seekers should ride it until then.”

Employers still struggling to fill positions

Pandemic-related factors -- lack of childcare, health concerns, and unemployment benefits, to name a few -- are still holding down the number of workers who are ready to jump back into the labor force. The JOLTS report shows that job openings still exceeded the number of Americans looking for work (8.7 million).

To raise employment numbers, some states have already put an end to the unemployment benefits introduced during the pandemic. The rest of the nation will see those benefits expire next month. 

Many large retailers struggling to fill jobs have raised pay and unveiled new perks as a way to get potential workers off the sidelines. In May, Amazon announced $1,000 hiring bonuses and pay raises for many of its hourly workers. Last week, CVS announced that it would raise its hourly minimum wage and eliminate education requirements in an effort to expand its workforce. 

Target announced last month that it would give each of its roughly 340,000 hourly workers a $200 bonus as a way of showing appreciation and recognition for continuing to “show up bigtime.” The retailer also recently said it will offer employees a debt-free college education starting this fall. Walmart had already announced a similar education program. 

Businesses continued a rapid pace of rehiring in July. The Labor Department reports that the economy added 943,000 jobs last month, better than most economists expected. Perhaps even more notable, the nation’s unemployment rate dropped a half-point to 5.4%, the lowest since the pandemic began.

The consensus estimate from economists was for 845,000 new jobs. Total non-farm payrolls beat that by nearly 100,000 despite the fact that the Delta variant was spreading quickly during the month.

The number of unemployed persons fell by 782,000 to 8.7 million. One factor may have been an action taken by 24 states that ended enhanced unemployment benefits early. The extra $300 a week in benefits is scheduled to end next month.

“Strong job growth continued in leisure and hospitality, which added 380,000 jobs in July. Employment gains continued in food services and drinking places,  accommodation, and arts, entertainment, and recreation,” said William Beach, commissioner of the Bureau of Labor Statistics.

Restaurants and bars added 253,000 jobs during the month, hotels added 74,000 jobs, and arts, entertainment, and recreation businesses hired 53,000 people. There was also a surge in government employment last month, primarily in the area of education. Across the country, more school districts prepared for the fall term and a return of students to the classroom. Local government education added 221,000 jobs, while private schools added 40,000.

Remote work declined slightly

The report also showed 13.2% of employed persons teleworked because of the coronavirus pandemic. That’s down from 14.4% in June, suggesting that more offices reopened despite the spread of the Delta variant. 

Health care added 37,000 jobs in July, most of them at clinics and doctors’ offices. Factories added 27,000 jobs last month but remain nearly a half-million below pre-pandemic levels. Information services added 24,000 over the month, with three-quarters of the gain coming in the motion picture and sound recording industries. Overall, that sector is down by 172,000 jobs since February 2020, just before the pandemic began. 

The trend of workers getting higher wages also continued last month. In July, average hourly earnings for all employees on private nonfarm payrolls increased by 11 cents to $30.54, following increases that occurred over the prior three months.

In a report released Thursday, the Department of Labor said that new applications for unemployment benefits fell to a new pandemic low last week. 

“In the week ending July 10, the advance figure for seasonally adjusted initial claims was 360,000, a decrease of 26,000 from the previous week's revised level,” the Labor Department said. “This is the lowest level for initial claims since March 14, 2020 when it was 256,000.” 

The numbers add to mounting evidence that the economy and job market are bouncing back from their pandemic depths. However, companies are still struggling to fill open positions. 

“Businesses are still having trouble finding people,” Federal Reserve Chairman Jerome Powell said on Wednesday in testimony to Congress.

Some businesses have suggested that federal unemployment benefits are the reason unemployed people aren’t filling open positions. Twenty-six states have stopped distributing extra benefits in an effort to spur hiring. Federal benefits are set to expire in all states in September.

There are other factors keeping hiring down, including lingering health concerns and childcare responsibilities. Many Americans are still hesitant to work around large numbers of people, and others have stopped looking for work because they’re still caring for their children in the wake of the shutdown of schools and day care centers. 

It was a little easier to find a job last month. The U.S. economy added 850,000 jobs in June, showing that Americans who have been looking for jobs are finding them.

The Labor Department report of 850,000 new jobs is the largest number since the start of the pandemic and easily exceeded economists’ consensus estimate of 706,000. Despite that, the unemployment rate rose to 5.9% because more people were seeking jobs last month.

“Job growth restarted in January of this year, and nonfarm payroll employment has increased by 3.3 million over the past six months as the number of vaccinations has increased, the number of coronavirus cases has fallen, and pandemic-related restrictions have been relaxed,” said William Beach, commissioner of the Bureau of Labor Statistics.

But Beach notes that the 15.6 million new jobs created since April 2000, is about 6.8 million fewer than the number of Americans employed in February 2020, just before the pandemic shut down the economy.

Bars and restaurants are hiring

In June, the biggest job growth continued to be in leisure and hospitality, which added 343,000 jobs last month. Over half of the job gain was in bars and restaurants, many of which opened at full capacity last month and therefore needed more employees. Many of these establishments paid hiring bonuses in order to attract new employees.

Hotels and other accommodations added 75,000 jobs, while recreation-oriented businesses hired 74,000. Even so, employment in leisure and hospitality is down by 2.2 million, or 12.9%, from its level in February 2020.

Government hiring also increased sharply, primarily because schools reopened and took on additional staff. Employment rose by 155,000 in local government education, by 75,000 in state government education, and by 39,000 in private education.

Employment in professional and business services rose by 72,000, with nearly half of the hiring being done by temporary help services. Retailers created 67,000 jobs last month with the biggest gains among clothing stores. Auto dealers added 8,000 jobs, despite the fact they had fewer cars to sell.

Overall, the retail sector has a long way to go before getting back to “normal.” There are now 303,000 fewer retail jobs than there were at the start of the pandemic. Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $30.40 in June. That’s less than the 13-cent increase in May and the 20-cent increase in April.

The number of posted job listings hit a record high of 9.3 million in April, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). 

Analysts said the surge in job postings is the result of economic upturn set in motion by the nation’s recovery from the pandemic recession of last year. April’s job postings beat a record set in March of 8.3 million and topped analysts’ expectation of around 8.18 million. 

Job postings on the last business day of April were at their highest level since the JOLTS series began in December 2000, the Labor Department said. The hire rate in April remained more or less unchanged at 4.2% from the previous month.

“Hires increased in accommodation and food services (+232,000) and in federal government (+10,000),” the report noted. “Hires decreased in construction (-107,000), durable goods manufacturing (-37,000), and educational services (-32,000). The number of hires was little changed in all four regions.”

More growth coming soon

The quits rate, which is viewed as a way to gauge workers’ confidence that they can find another job, increased substantially to 3.95 million (a 10.8% increase). The retail sector saw a particularly high jump in quits -- from 3.6% to 4.3%. 

Overall, the JOLTS numbers suggest that the job market is poised to see more growth in the months ahead.

"There are still a lot of people unemployed, but there does not seem to be a lot of eagerness to work," Chris Low, chief economist at FHN Financial in New York, told Reuters. "There would have been many more hires if employers could find more people."

More Americans returned to work last month, but not as many as economists expected. The Labor Department reports employers filled 559,000 jobs last month.

While it’s a solid number, the consensus estimate among economists was an increase of more than 600,000 jobs following April’s disappointing figure of 260,000 new jobs. The nation’s unemployment rate dropped to 5.8%, the lowest since the start of the pandemic.

The biggest job gains last month occurred in leisure and hospitality as bars and restaurants reopened to full capacity and Americans began to travel again. 

Employment in leisure and hospitality rose by 292,000 last month. Nearly two-thirds of the increase was in food services and drinking places, which added 186,000 jobs.

Employment also rose in amusements, gambling, and recreation establishments. Hotels added 35,000 jobs. Despite the gains, the number of jobs in the sector is down by 2.5 million from its level in February 2020, just before the start of the pandemic.

Other sectors slower to rehire

As schools and universities reopened last month, jobs increased in both public and private education. Employment rose by 53,000 in local government education, by 50,000 in state

government education, and by 41,000 in private education. Again, those numbers pale in comparison to pre-pandemic levels.

Health care and social assistance added 46,000 jobs in May. Employment in health care 

continued to trend up, adding 23,000 positions. Social assistance added 23,000 jobs over the month, largely in child daycare services.

Jobs in retail changed little from April to May. Clothing and clothing accessories stores added 11,000 jobs last month but food and beverage stores shed 26,000 jobs. Overall the retail sector lost 6,000 jobs.

The U.S. Chamber of Commerce has warned that the U.S. is facing a severe shortage of people willing to take jobs in the post-pandemic economy. The chamber is lobbying for federal and state policy changes that will help train more Americans for in-demand jobs, remove barriers to work, and double the number of visas available for legal immigrants.