The October Bureau of Labor Statistics report on employment, released on November 5, contains broadly positive news, with overall growth in non-farm employment of 531,000 which is the highest since July. The number of US jobs created surpassed the estimated 450,000 wages and recovering from dipping point in September. The Labor Department said Friday that the US labor market was “shaking”, with nonfarm payrolls rising more-than-expected as the unemployment rate fell to 4.6%. Private sector wages were even higher than the main October number, reaching 604,000, but overall net employment contracted due to another weak month for public sector jobs (mainly in education), which posted a loss of 73,000.
The number of Americans citing the pandemic as their reason for not looking for work fell to 1.3 million from 1.6 million. (This measure usually decreased in the months when the number of cases decreased.)
Even with these gains, the labor market will still be 8.4 million jobs below pre-pandemic levels in February 2020. In short, the economy added 235,000 jobs in August and September, more than originally reported. The 7.4 million unemployed reported in October indicates a continued to decline, but is still well above the February 2020 level, before the 5.7 million pandemic. Even with these gains, the labor market will still be 8.4 million jobs below pre-pandemic levels in February 2020.
What do the numbers mean?
The U.S. economy has now reportedly recovered 80 percent of the jobs lost at the depth of the recession in 2020, but there are still over 4 million fewer jobs than there were before the pandemic, and a labor force participation rate which remains troublingly below pre-pandemic levels. According to Becky Frankiewicz, president of ManpowerGroup, NA., the report represents the beginning of a reconciliation between U.S. companies and workers.
“As stimulus ended, employers realized they needed to move closer to what workers want in order to bring them back in, with higher wages, greater flexibility and more focus on health and wellbeing,” she said. “Employers accept that good wages are now table stakes, and that employees are seeking more flexibility and more purpose in their lives. Participation is not where any of us would like it to be. Workers are trickling back in yet there is more that needs to be done to bring people back, particularly as we begin to see the sectors that are set to grow post-pandemic. Our data tells us attracting talent to IT and tech roles needs to be a top priority.”shrm.com
If you read the headlines, the discussion of seems to focus on major labor shortages, but the fact that the share of adults who are part of the labor force has remained well below prepandemic levels, employers continue to find people to take jobs. The latest numbers undermine any narrative that the pandemic has caused large masses of people to leave the work force permanently, whether because of government stimulus benefits or personal factors. The real story is the gains in employment is a more direct result of companies being forced to pay significantly higher wages, especially for people at the lower end of the pay scale. I’ve said in previous blog posts and on recent panels that the pandemic accelerated conversations around livable wages and forced companies to begin paying what workers deserve (or at least closer to it).
The pandemic upended norms across the economy, fast-tracked changes that were already in discussion and challenged the rules that had governed the labor market for years. Most of the big businesses have spent the last several decades substituting capital for labor through automation, offshoring and productivity improvements, but now find there is not enough labor to meet the demands of its customers.
Those of us in Talent Acquisition have to continue to shift our efforts and focus on quality candidates in a candidate driven market. Many who recruit entry-level talent find ourselves not only competition with traditional distractors but now Amazon and other companies who are constantly changing the wage in many markets. Workers have now found the footing to negotiate for more livable wages and are taking time to explore a company’s culture and benefits before committing to a role.
The shift in workforce demographics is another interesting note buried in the labor numbers for October. Here two demographic changes in the workforce.
The silver lining to the jobs report is a slight upward trend in market growth. While finding talent to engage and accept offers is a lot more challenging, it seems more workers are ready to make a move. It’s a time for Talent Acquisition to not only focus on new, innovative ways to attract and engage talent but also a time for us to help focus on retention. If you’d like some ideas on how to navigate these challenging dynamics, check out some of the posts below.
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