Economists talk about terms that don’t always make much sense to normal folks, things like “quantitative easing” or “macroeconomic theory” or “gross margin.” Often, these terms are paired with descriptions like “cooling” or “softening” to add that extra little bit of sophistication and nuance. So, when we hear reports of how “the labor market is weakening,” it may not mean a whole lot to us, but it’s important that we know what’s going on. We’re here to help! 😁
Here are Five Fast Facts on the labor market:
- ❓❗ Explain Please! - The “labor market” is the picture of overall supply and demand for workers. It’s obviously a key part of the economic health of the country, with many factors that influence it in one direction or another. Think of it as how many jobs are out there compared to how many workers there are to fill those jobs.
- 📉 Down Down Down - August saw only 187,000 jobs created, the third month in a row with fewer than 200k. Previous months’ numbers were also revised downward again big time - something that has happened every month this year! This means that almost ⅔ of those jobs “created” were jobs that should have already existed…but actually didn’t because of the previous monthly downward revisions. Sounds like projections have been overly optimistic, no? Whaddya bet that next month the August numbers will be revised down, too?
- ⛔ Less Quitting And Hiring - There are fewer job openings out there right now for a couple of reasons. First, businesses are hiring less because it’s been so hard to bring people in lately (and they have to pay more in wages) and not laying off as much. At the same time, workers are quitting at the lowest level since February of 2021 because they are less confident of getting a better paying job somewhere else. Guess the gravy train had to end eventually, but it means fewer open jobs out there.
- 👶🧓 It’s The Demographics - Some experts are predicting a “forever” labor shortage due to the overall number of people working in the country because Baby Boomers are retiring and birth rates are falling. The high was 67.4% in 2000, but it is expected to go down to 60.4% by 2032. This doesn’t seem good for our future prospects!
- 👍 What To Do? - In response to these realities, businesses have adapted and gotten creative in several ways. They’ve been hiring more contractors – 28% more since the start of the pandemic – to remain flexible. Foreign worker hires have also gone up with the ability to work remotely, and businesses are also hiring based on skills rather than qualifications. For example, a skill certificate or bootcamp completion might suffice today where a 4-year degree would have been required a couple years ago.
🔥Bottom line: The bottom line is that there aren’t as many job openings out there now, for many reasons. If you’re looking for a change, by all means go for it! Just be aware that it may not be quite the raise-fest that it has been over the last couple of years, and it may take a bit longer to find the Paycheck you want than it has in the past.
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