Job Numbers Normalizing, but Don’t Expect an “Employer’s Market” Anytime Soon
The recent job numbers may have surprised Wall Street and even some jobs report watchers who thought the September numbers would be half what they were. Understandable if those predictions were based on industry surveys and the steady increase in interest rates designed to slow the economy and scare away inflation. However, according to Brian Miller, the CEO of Patrice & Associates, the macro demographics tidal forces that have been building for decades may be playing a bigger role than anyone expected. Conscious Capital Growth business accelerator connected for this month’s round-up.
CCG: What’s the news this month? It seems job growth continued to surge despite efforts to dampen consumer spending, business growth, and corporate investment.
Miller: Jobs watchers were surprised that September’s interest rate hike seemed to have little effect on companies’ job creation and their need for more workers. U.S. employers added 336,000 jobs in September, and the unemployment rate remained steady at 3.8%. To put that number in perspective, the unemployment rate was 3.5% just before the February 2020 pandemic-fueled layoffs. It feels like we have a new normal.
CCG: What is causing the resiliency?
Miller: Historically, raising interest rates has been an effective tool for slowing the economy, and it may still be. The question is how high do rates have to go to counter the macro trends that few talk about in terms of employment impact? And when I say counter, I mean slow job growth enough to balance out the unemployment rate.
CCG: What macro trends continue to make it a “job seeker’s market?”
Miller: Let’s start with the numbers. On the last business day of August 2023, there were 9.6 million job openings and 6.4 million unemployed people to fill them. Three trends are fueling this imbalance. First, droves of Baby Boomers who left the job market during the pandemic have not returned. That left a gaping hole in the job pool of experienced, qualified workers. Second, Baby Boomer’s children had far fewer babies than generations before them. Ann Oberhauser, professor of Sociology at Iowa State University who spoke at the World Economic Forum, laid it out very clearly, “Post-Boomer generations in the United States have seen a 50% decline in birth rates between 1950 and 2021 from 25 births per 1000 people to 12.” So, the pool of workers right behind the Baby Boomers is smaller still. All that, combined with the third trend, the trajectory of our immigration policy, will significantly affect the nation’s supply of workers in the future.
CCG: How is this impacting your firm and staffing and recruiting in general?
Miller: This job seeker’s market is one of the reasons why Patrice & Associates is seeing more and more companies turn to staffing and recruiting firms to help them find the best talent. Another reason is that employers are getting more selective with their hiring processes. That can mean slow, and with 3.8% unemployment, being slow means they risk missing out on the best person for the job. Plus, hiring managers are realizing they can’t just post a job on a job board and expect to find that dream employee. The people companies are looking for are already employed. Locating and landing them quickly, without a staffing and recruiting company, is next to impossible.
CCG: Is the hospitality sector experiencing the same pattern?
Miller: Leisure and Hospitality was the all-star this month. The sector added 96,000 jobs, which led the pack in job creation despite fears of a softening economy. Employment in food services returned to its pre-pandemic employment numbers, while accommodation, i.e., hotels, ended the month just below its pre-pandemic employment levels. We’re seeing robust hiring in hotels/accommodation at Patrice & Associates, which is rapidly becoming a sub-specialty for us.
CCG: Do you think it will be more of the same in the months ahead?
Miller: Although we’re no longer in the post-pandemic hungry-hiring surge when companies were grabbing up people and throwing the salary charts out the window, companies must still compete for the best workers. Salary offers and quit rates at last are coming back into balance with pre-pandemic levels. The big exception is the Leisure and Hospitality industry, which remains higher than other sectors, thus fueling movement in that vertical.
CCG: What can derail business expansion and job growth?
Miller: We live in a world with rising interest rates, increased yields on treasury notes, surging energy prices, labor strikes, and the strong possibility of another government shutdown. These wild cards could take the recessionary “soft landing” off track. You can’t rule out a curve ball. However, so far, the job market has remained resilient through it all.