By Bob Marshall of the Bob Marshall Group https://www.themarshallplan.org/bls-analysis-for-recruiters-february-2023/
Economic Activity Up Slightly; Firms Getting Less Flexible with Remote Work: Beige Book
Daily News, March 9, 2023
Economic activity in the US increased slightly in early 2023, according to the US Federal Reserve’s ‘Beige Book’ report released Wednesday. 6 Federal Reserve Districts reported little or no change in economic activity while the other 6 reported expansion at a modest pace.
The Beige Book also reported labor conditions across the US remained solid despite hiring freezes by some firms and scattered reports of layoffs. The report also noted some firms were becoming less flexible and beginning to reduce remote work options.
Here are select comments from the Beige Book on the labor outlook:
Boston District. Welders, carpenters, and mechanics were highly sought by construction employers, according to staffing firm contacts.
New York District. Labor market conditions have remained strong; however, manufacturers reported employment declined for the first time since early in the pandemic. A New York City employment firm attributed some of the recent churn to more workers seeking fully remote or hybrid jobs as many businesses have begun requiring employees to be on site.
Philadelphia District. Contacts — including staffing firms — noted that hiring continued to be easier, with more applicants, lower turnover, and less wage pressure. One staffing contact commented that billboards advertising jobs were no longer seen in the area.
Cleveland District. Contacts indicated employment growth will slow further in the coming weeks.
Richmond District. Wage growth was beginning to slow.
Dallas District: The pace of hiring slowed in the service and energy sectors, and employment growth stalled in manufacturing.
San Francisco District. Contacts in the technology, entertainment and transportation sectors mentioned that layoffs have either continued or are being considered as firms seek cost-cutting strategies amid lower demand.
Nearly 78% of Employers Gave Pay Raises in Past 6 Months; Compensation Top of Mind Despite Recession Concerns
Daily News, March 3, 2023
Despite economic downturn concerns, 77.9% of US employers gave pay raises in the past 6 months, according to a survey by iHire. The pay raises were given due to merit, performance, pay compression or the rising cost of living.
“Compensation is top of mind for employers and their workforces,” said Lisa Shuster, chief people officer at iHire. “Now is the time for organizations to ensure they are compensating employees fairly while avoiding pay compression. The good news is that most employers do not appear overly worried about a recession and continue to invest in their most valuable business asset: their people.”
Of the 436 employers surveyed, just 22.1% had not given raises recently. Of that 22.1% that did not give a raise, 69.6% said they couldn’t afford to give raises, and 32.6% said they were preparing for an economic downturn or tightening their 2023 budgets. In addition, 13.0% reported poor or stagnant employee performance, and 13.0% were unsure how to determine fair compensation.
iHire also surveyed 305 workers and found that 23.9% of respondents had asked for a raise in the past six months, and 60.3% got a raise upon asking, according to the report. Of the 76.1% of workers who had not asked for a raise, 50.0% already received a raise recently and 25.6% did not know how to negotiate their salary. In addition, 23.2% were afraid to ask or approach their supervisor for a raise and 11.0% did not think their performance was deserving of a raise.
For the report, iHire surveyed 436 employers and 305 workers in 57 industries across the US in February.
More Than Half of NABE Forecasters Predict 50% Probability of Recession This Year
Daily News, February 27, 2023
Forecasters expect 0.3% US GDP growth this year, and more than half, 58%, say there is a 50% probability of a recession this year, according to the “February 2023 Outlook” report released today by the National Association for Business Economics.
“Results of the February 2023 NABE Outlook survey continue to reflect significant divergence regarding the outlook for the US economy,” said NABE President Julia Coronado, president and founder, MacroPolicy Perspectives LLC. “Estimates of inflation-adjusted gross domestic product or real GDP, inflation, labor market indicators and interest rates are all widely diffused, likely reflecting a variety of opinions on the fate of the economy — ranging from recession to soft landing to robust growth.”
The median projection for real GDP growth is 0.3% from the fourth quarter of 2022 to the fourth quarter of 2023 and 1.9% quarter over quarter in 2024. The estimates between the lowest five responses and the highest five responses for 2023 range from -1.3% to 1.9% in 2023 and from 0.1% to 2.6% in 2024.
The report also found that 58% of forecasters continue to believe that the likelihood of recession occurring over the next 12 months is greater than 50%. Whereas 52% of respondents in the December survey expected a recession to begin in the first quarter of 2023, 28% hold the same view in the February survey.
The forecast for the US nonfarm employment growth was revised upward from those in the December 2022 survey. The median projection for monthly payroll growth in 2023 is 102,000, 34% higher than the 76,000 jobs forecasted in December 2022 survey. After projecting a monthly average of 256,000 for the first quarter, the panel calls for slower job growth every quarter of 2023. Meanwhile, the five lowest estimates forecast a further decline in the unemployment rate to 3.3% by the fourth quarter of 2023, and the five highest forecasts anticipate unemployment to rise to 5.7% by then.
In addition, the report calls for the US unemployment rate to rise over the next four quarters, from 3.5% in the first quarter of 2023 to 4.4% in the first quarter of 2024, and then to average 4.3% in 2024 as a whole.
Forecasters expect elevated wage growth in 2023, with compensation per hour rising 4.0% in 2023 — lower than the 4.4% in 2022.
NABE’s survey included 48 professional forecasters and took place from Feb. 3 to Feb. 10, 2023.
US Economy Looks Stronger in the First Quarter
Daily News, February 10, 2023
The outlook for the US economy improved from 3months ago, according to the first-quarter Survey of Professional Forecasters released today by the Federal Reserve Bank of Philadelphia.
The panel of 37 economists in the report now predicts the economy will expand at an annual rate of 0.6% in this quarter and 1.0% in the second quarter of this year, increases from previous predictions of 0.2% in each quarter.
On an annual average basis, the forecasters expect real GDP to expand 1.3% this year, up from 0.7% projected in the previous forecast.
The forecasters have also revised downward the chance of a contraction in real GDP in any of the next 4 quarters. The panelists now expect a 40.4% chance of negative growth, down from 47.2% in the previous survey. Forecasts for the next 3 quarters have also been revised downward.
Along with the improvement in the growth outlook, the forecasters have revised their estimated for the unemployment rate. The unemployment rate is now predicted to increase to 4.1% in the fourth quarter from 3.5% this quarter.
Additionally, the forecasters expect the unemployment rate to average 3.8% in 2023 on an annual basis, a decrease from the previous estimate of 4.2%.
On the employment front, the panelists have revised their estimates for job gains upward. They now project job gains at a monthly rate of 217,800 in 2023, up from 143,600 projected in the previous forecast.
More Than Half Cut Bachelor’s Degree Requirements
Daily News, February 8, 2023
53% of hiring managers said their company eliminated the bachelor’s degree requirement for certain roles in the past year, according to a report by Intelligent.com, a resource for online degree rankings and higher education planning. Among this group, 60% said they removed the prerequisite for entry-level positions.
In addition, 57% of hiring managers said they eliminated degree requirements for mid-level positions, and 33% waived the bachelor’s degree requirement for senior-level jobs.
“The move to eliminate a bachelor’s degree requirement is not surprising,” said Intelligent.com Chief Career Advisor Stacie Haller. “With 2 open job openings for every job seeker in this market, companies are at war for talent. We are hearing about layoffs in certain sectors, but in many others, companies are vying for the same candidates to fill open roles.”
With regards to the top reasons for eliminating the bachelor’s degree requirement, 64% of survey respondents said they wanted to increase the number of applicants, 59% said they believe there are other ways to acquire skills besides a four-year degree and 58% said they sought to create a more diverse workforce.
Meanwhile, 76% of hiring managers believe their company is “very likely” or “likely” to favor experience over education. However, many companies still recognize the value of education, with 72% of hiring managers admitting that having a bachelor’s degree is “very valuable” or “valuable” when evaluating candidates.
Conversely, other degree or certification types are considered less valuable, with only 24% of respondents seeing value in certificate programs, 23% in associate degrees, 16% in online degrees and 8% in boot camps.
Intelligent.com surveyed 1,000 hiring managers in the US for the report.
79% of Remote Employees Worked More Than 2 Jobs in Past Year: ResumeBuilder
Daily News, February 6, 2023
8 in 10 remote workers have been overemployed within the past year, according to a report by ResumeBuilder. The survey found that 79% of remote workers had worked 2 or more remote jobs simultaneously to earn an extra income within the past year.
“When we look at the data of our survey, most of the respondents who hold more than just 1 full-time job are in careers where their typical hours can be flexible and may change weekly, such as sales and IT/software,” said ResumeBuilder Chief Career Advisor Stacie Haller. “Employees in those positions likely have hours where they can take on other positions. What should matter to the employer is how they are performing on the job they were hired for.”
The survey found that 36% of respondents have at least 2 full-time jobs, and the vast majority said they also work multiple part-time jobs.
When asked how easy or difficult it is to balance working multiple jobs, 15% of respondents said it is “very easy,” 24% said it is “somewhat easy,” 52% said it is “somewhat difficult,” and 10% said balancing multiple jobs is “very difficult.”
Meanwhile, when asked if it was or is difficult to hide working multiple jobs from their employers, 15% of respondents said it is or was “very difficult,” 45% said “somewhat difficult,” 25% said “a little difficult,” 7% say “not at all difficult,” and 9% said that their employers are aware of their situation.
According to the report, nearly two-thirds of the respondents, 63%, said that, within the past year, an employer has found out they were working multiple jobs.
ResumeBuilder surveyed more than 1,000 employees working entirely remotely in January for the report.
Employment Trends Index Rises for the Second Consecutive Month, Signals Shift from Short-Lived Declining Trend
Daily News, February 6, 2023
The Conference Board’s Employment Trends Index released today rose in January to a reading of 118.74, an increase from the upwardly revised reading of 117.06 in December and signaling a shift from the short-lived declining trend seen last year.
“The Employment Trends Index rose for the second consecutive month in January, a reversal of a short-lived declining trend in 2022,” said Selcuk Eren, senior economist at The Conference Board. “Despite rapid interest rate hikes — which were expected to reduce labor demand — we haven’t seen widespread layoffs. Indeed, hiring was outsized and broadly based in the January employment report. Robust hiring continues to keep the ETI at a very high level and the economy is still experiencing significant job gains in industries where labor shortages have been most acute.”
Eren noted labor shortages will continue to be the theme going forward.
“We have seen job gains in industries — including leisure and hospitality and government — where employment is still below pre-pandemic levels. Likewise, job openings and voluntary quits are below their historic highs but still above pre-pandemic levels. The number of employees working in temporary help services — a component of the ETI and an important leading indicator for hiring — increased in January after falling for two consecutive months. This is revised from an originally reported five-month decline.”
Thus far, job losses seem to be limited to the information sector, which includes most tech companies, according to Eren. One sign of rebalancing in the labor market may be slower wage growth. Hourly wage growth — which stands at 4.4% year-over-year in January — remains above pre-pandemic levels but is on a declining trend after reaching 5.9% last year.
The Conference Board anticipates the Federal Reserve to continue increasing interest rates to reduce labor market tightness and bring wage growth and inflation under control for the rest of 2023.
The organization also noted January’s release of the Employment Trends Index includes historical revisions dating back to 2017, causing index levels and month-on-month changes to be incomparable to previous releases. However, the cyclical properties (e.g., turning points and trends) of the index remain unchanged.
ADP National Employment Report: Private Sector Employment Increased by 242,000 Jobs in February; Annual Pay was Up 7.2%
ROSELAND, N.J. – March 8, 2023
Private sector employment increased by 242,000 jobs in February and annual pay was up 7.2% year-over-year, according to the February ADP® National Employment Report TM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”).
The jobs report and pay insights use ADP’s fine-grained anonymized and aggregated payroll data of over 25,000,000 U.S. employees to provide a representative picture of the labor market.
The report details the current month’s total private employment change, and weekly job data from the previous month. ADP’s pay measure uniquely captures the earnings of a cohort of almost 10,000,000 employees over a 12-month period.
“There is a tradeoff in the labor market right now,” said Nela Richardson, chief economist, ADP. “We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term.”
JOBS REPORT
Private employers added 242,000 jobs in February. Job gains are solid and wage growth remains elevated. A particular area of weakness is with small establishments, which shed jobs every month since August 2022.
*Sum of components may not equal total, due to rounding. The January total of jobs added was revised up from 106,000 to 119,000.
Change in U.S. Private Employment: 242,000
Change by Industry Sector
Goods-producing: 52,000
Natural resources/mining 25,000
Construction -16,000
Manufacturing 43,000
Service-providing: 190,000
Trade/transportation/utilities 3,000
Information 9,000
Financial activities 62,000
Professional/business services -36,000
Education/health services 35,000
Leisure/hospitality 83,000
Other services 34,000
Change by U.S. Regions
Northeast: 37,000
New England 2,000
Middle Atlantic 35,000
Midwest: -12,000
East North Central -35,000
West North Central 23,000
South: 94,000
South Atlantic 40,000
East South Central 35,000
West South Central 19,000
West: 128,000
Mountain 29,000
Pacific 99,000
Change by Establishment Size
Small establishments: -61,000
1-19 employees -56,000
20-49 employees -5,000
Medium establishments: 148,000
50-249 employees 77,000
250-499 employees 71,000
Large establishments: 160,000
500+ employees 160,000
PAY INSIGHTS
Pay growth slowed in February
Pay growth for job stayers slowed to 7.2% in February, the slowest pace of gains in 12 months.
Pay growth decelerated for job changers, too, falling to 14.3% from 14.9%.
Median Change in Annual Pay (ADP matched person sample)
Job-Stayers 7.2%
Job-Changers 14.3%
Median Change in Annual Pay for Job-Stayers by Industry Sector
Goods-producing:
Natural resources/mining 7.8%
Construction 7.1%
Manufacturing 7.1%
Service-providing:
Trade/transportation/utilities 7.4%
Information 6.5%
Financial activities 7.3%
Professional/business services 6.5%
Education/health services 7.2%
Leisure/hospitality 10.1%
Other services 6.8%
Median Change in Annual Pay for Job-Stayers by Firm Size
Small firms:
1-19 employees 5.6%
20-49 employees 7.1%
Medium firms:
50-249 employees 7.5%
250-499 employees 7.4%
Large firms:
500+ employees 7.5%
The March 2023 ADP National Employment Report will be released at 8:15 a.m. ET on April 5, 2023.
Bottom-line: To my audience of recruiters, always remember this: Our ‘bread and butter’, especially on the contingency side of the house, has historically been, and continues to be, small and medium-sized client companies. Along with the large companies, these companies need to be in included in your niche!
Job Openings and Labor Turnover Summary – January 2023
March 8, 2023
The number of job openings decreased to 10,800,000 on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations changed little at 6,400,000 and 5,900,000, respectively. Within separations, quits (3,900,000) decreased, while layoffs and discharges (1,700,000) increased. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class. This release also presents 2022 annual estimates for job openings, hires, and separations.
Job Openings
On the last business day of January, the number and rate of job openings decreased to 10,800,000 (-410,000) and 6.5%, respectively. In January, the largest decreases in job openings were in construction (-240,000), accommodation and food services (-204,000), and finance and insurance (-100,000). The number of job openings increased in transportation, warehousing, and utilities (+94,000) and in nondurable goods manufacturing (+50,000).
Hires
In January, the number and rate of hires changed little at 6,400,000 and 4.1%, respectively. Hires changed little in all industries.
Separations
Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations include separations due to retirement, death, disability, and transfers to other locations of the same firm.
In January, the number of total separations changed little at 5,900,000. The rate was unchanged at 3.8%. The number of total separations decreased in federal government (13,000).
In January, the number of quits decreased to 3,900,000 (-207,000), and the rate was little changed at 2.5%. Quits decreased in professional and business services (-221,000), educational services (-14,000), and federal government (-5,000).
In January, the number of layoffs and discharges increased to 1,700,000 (+241,000). The rate was little changed at 1.1%. Layoffs and discharges increased in professional and business services (+190,000) but decreased in federal government (-5,000).
The number of other separations was little changed in January at 302,000. Other separations decreased in professional and business services (-29,000), finance and insurance (-20,000), and health care and social assistance (-18,000). The number of other separations increased in accommodation and food services (+15,000); information (+11,000); and arts, entertainment, and recreation (+4,000).
Establishment Size Class
In January, establishments with 1 to 9 employees saw little change in their job openings rate, hires rate, and total separations rate, but quits rate decreased. Establishments with more than 5,000 employees saw little change in their job openings rate, hires rate, and total separations rate.
Annual Levels and Rates
Consistent with BLS practice, annual estimates are published for not seasonally adjusted data each year with the January news release.
The annual average level of job openings is the average of the 12 monthly levels. Annual levels for hires and separations are the sum of the 12 monthly levels.
Annual average rates for job openings are computed by dividing the sum of the 12 monthly JOLTS levels by the sum of the 12 monthly Current Employment Statistics (CES) employment levels plus the sum of the 12 monthly job openings levels and multiplying that quotient by 100.
Annual average rates for hires and separations are computed by dividing the sum of the 12 monthly JOLTS levels for each data element by the sum of the 12 monthly CES employment levels, and multiplying that quotient by 100.
In 2022, the annual average job openings level was 11.2 million, an increase of 1,200,000 from 2021. The annual average job openings rate was 6.8% in 2022, compared to 6.4% in 2021.
In 2022, there were 77,200,000 hires, an increase of 1,200,000 from 2021. Total separations increased by 3,200,000 in 2022 to 72,300,000. Accounting for 70.0% of total separations, quits numbered 50,600,000 in 2022, the highest annual level in the survey’s history (JOLTS annual estimates are available back to 2001). Layoffs and discharges increased by 461,000 in 2022 to 17,600,000 and accounted for 24.3% of total separations. Other separations decreased by 138,000 in 2022 to 4,100,000 and accounted for 5.7% of total separations.
The annual average hires rate for 2022 was 4.2%, similar to the rate of 4.3% from 2021. The annual average total separations rate for 2022 was 3.9%, unchanged from the previous year. The annual average rates for the components of total separations were 2.8% for quits, 1.0% for layoffs and discharges, and 0.2% for other separations.
____________
The Job Openings and Labor Turnover Survey estimates for February 2023 are scheduled to be released on Tuesday, April 4, 2023, at 10:00 a.m. (ET).
As we recruiters know that 10,800,000 number only represents 20% of the jobs currently available in the marketplace. The other 80% of job openings are unpublished and are filled through networking or word of mouth or by using a RECRUITER. So, those 10,800,000 published job openings now become a total of 54,000,000 published AND hidden job orders.
Online Labor Demand Falls in January
February 15, 2023
The Conference Board®−Lightcast® Help Wanted OnLine® (HWOL) Index fell in January to 164.6 (July 2018=100), down from 167.2 in December. The 1.6% decline between December and January follows a 5.5% increase between November and December. Overall, the Index is down 3.9% from a year ago.
The Conference Board®-Lightcast® Help Wanted OnLine® (HWOL) Index measures the change in advertised online job vacancies over time, reflecting monthly trends in employment opportunities across the US. The Help Wanted OnLine® Index is produced in collaboration with Lightcast (formerly Emsi Burning Glass), the global pioneer in real-time labor market data and analysis. This collaboration enhances the Help Wanted OnLine® program by providing additional insights into important labor market trends.
PROGRAM NOTES
Prior to 2020, The Conference Board constructed the HWOL Index based solely on online job ads over time. Using a methodology designed to reduce non-economic volatility contributed by online job sources, the HWOL Index served an effective measure of changes in labor demand over time.
Beginning January 2020, the HWOL Index was refined as an estimate of change in job openings (based on BLS JOLTS), using a series of econometric models which incorporate job ads with other macroeconomic indicators such as employment and aggregate hours worked. By adopting a modeled approach which combines other data sources with data on online job ads, the HWOL Index more accurately tracks important movements in the labor market.
The Conference Board®-Lightcast® Help Wanted OnLine® (HWOL) Index measures changes over time in advertised online job vacancies, reflecting monthly trends in employment opportunities across the US. The HWOL Data Series aggregates the total number of ads available by month from the HWOL universe of online job ads. Ads in the HWOL universe are collected in real-time from over 50,000 online job domains including traditional job boards, corporate boards, social media sites, and smaller job sites that serve niche markets and smaller geographic areas.
Like The Conference Board’s long-running Help Wanted Advertising Index of print ads (which was published for over 55 years and discontinued in July 2008), Help Wanted OnLine® measures help wanted advertising—i.e., labor demand. The HWOL Data Series began in May 2005 and was revised in December 2018. With the December 2018 revision, The Conference Board released the HWOL Index, improving upon the HWOL Data Series’ ability to assess local labor market trends by reducing volatility and non-economic noise and improving correlation with local labor market conditions.
In 2019, Lightcast joined the Help Wanted OnLine® program as the new sole provider of online job ad data for HWOL. With this partnership, the HWOL Data Series has been revised historically to reflect a new universe and methodology of online job advertisements and therefore cannot be used in conjunction with the pre-revised HWOL Data Series. The HWOL Data Series begins in January 2015 and the HWOL Index begins in December 2005. HWOL Index values prior to 2020 are based on job ads collected by CEB, Inc.
Those using this data are urged to review the information on the database and methodology available on The Conference Board website and contact us with questions and comments.
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.
About Lightcast
As the global leader in labor market analytics, Lightcast illuminates the future of work with data-driven talent strategies. Formerly Emsi Burning Glass, Lightcast finds purpose in sharing the insights that build communities, educators, and companies, and takes pride in knowing our work helps others find fulfillment, too. Headquartered in Boston, Massachusetts, and Moscow, Idaho, Lightcast is active in more than 30 countries and has offices in the United Kingdom, Italy, New Zealand, and India. Lightcast is backed by global private equity leader KKR.
The next release for February 2023 is Wednesday, March 15, 2023, at 10 AM
U-6 Update
In February 2023, the regular unemployment rate edged up to 3.6% and the broader U-6 measure edged up to 6.8%.
The above 6.8% is referred to as the U-6 unemployment rate (found in the monthly BLS Employment Situation Summary, Table A-15; Table A-12 in 2008 and before). It counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.” Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over.
Here is a look at the February U-6 numbers for the previous 20 years:
February 2022 7.2%
February 2021 11.1%
February 2020 7.0%
February 2019 7.2%
February 2018 8.2%
February 2017 9.2%
February 2016 9.8%
February 2015 11.0%
February 2014 12.6%
February 2013 14.3%
February 2012 15.0%
February 2011 15.9%
February 2010 16.8%
February 2009 15.0%
February 2008 9.0%
February 2007 8.1%
February 2006 8.4%
February 2005 9.3%
February 2004 9.7%
February 2003 10.1%
The February 2023 BLS Analysis
Total nonfarm payroll employment rose by 311,000 in February and the unemployment rate edged up to 3.6%, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing.
The change in total nonfarm payroll employment for December was revised down by 21,000, from +260,000 to +239,000, and the change for January was revised down by 13,000, from +517,000 to +504,000. With these revisions, employment gains in December and January combined were 34,000 lower than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.
The unemployment rate is also published by the BLS. That rate is found by dividing the number of unemployed by the total civilian labor force. On February 3rd, 2023, the BLS published the most recent unemployment rate for February 2023 of 3.6% (actually, it is 3.571%, up .137% from 3.434% in January.
The unemployment rate was determined by dividing the unemployed of 5,936,000
(–up from the month before by 242,000—since February 2022, this number has decreased by 336,000) by the total civilian labor force of 166,251,000 (up by 419,000 from January 2023). Since February 2022, our total civilian labor force has increased by 2,389,000 workers.
(The continuing ‘Strange BLS Math’ saga—after a detour in December 2016 when the BLS {for the first time in years} DECREASED the total Civilian Noninstitutional Population—this month the BLS increased this total to 266,112,000. This is an increase of 150,000 from last month’s increase of 1,118,000. In one year, this population has increased by 2,788,000. For the last 3 years the Civilian Noninstitutional Population has increased each month—except in December 2016, December 2018, December 2019, & December 2020—by…)
| Up from January 2023 | by | 150,000 |
| Up from December 2022 | by | 1,118,000 |
| Up from November 2022 | by | 136,000 |
| Up from October 2022 | by | 173,000 |
| Up from September 2022 | by | 179,000 |
| Up from August 2022 | by | 172,000 |
| Up from July 2022 | by | 172,000 |
| Up from June 2022 | by | 177,000 |
| Up from May 2022 | by | 156,000 |
| Up from April 2022 | by | 120,000 |
| Up from March 2022 | by | 115,000 |
| Up from February 2022 | by | 120,000 |
| Up from January 2022 | by | 122,000 |
| Up from December 2021 | by | 1,066,000 |
| Up from November 2021 | by | 107,000 |
| Up from October 2021 | by | 121,000 |
| Up from September 2021 | by | 142,000 |
| Up from August 2021 | by | 155,000 |
| Up from July 2021 | by | 142,000 |
| Up from June 2021 | by | 131,000 |
| Up from May 2021 | by | 128,000 |
| Up from April 2021 | by | 107,000 |
| Up from March 2021 | by | 100,000 |
| Up from February 2021 | by | 85,000 |
| Up from January 2021 | by | 67,000 |
| Down from December 2020 | by | 379,000 |
| Up from November 2020 | by | 145,000 |
| Up from October 2020 | by | 160,000 |
| Up from September 2020 | by | 183,000 |
| Up from August 2020 | by | 184,000 |
| Up from July 2020 | by | 185,000 |
| Up from June 2020 | by | 169,000 |
| Up from May 2020 | by | 157,000 |
| Up from April 2020 | by | 151,000 |
| Up from March 2020 | by | 138,000 |
| Up from February 2020 | by | 130,000 |
Subtract the ‘civilian labor force’ from the ‘civilian noninstitutional population’) and you get 99,861,000 ‘Not in Labor Force’—down by 269,000 from last month’s 100,130,000. In one year, this NILF population has increased by 398,000. The government tells us that most of these NILFs got discouraged and just gave up looking for a job. My monthly recurring question is: “If that is the case, how do they survive when they don’t earn any money because they don’t have a job? Are they ALL relying on the government to support them??”
This month, our Employment Participation Rate—the population 16 years and older working or seeking work—rose to 62.5%. This rate is .1% higher than the historically low rate of 62.4% recorded in September 2015—and, before that, the rate recorded in October 1977—9 months into Jimmy Carter’s presidency—almost 40 years ago!
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment
rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in February was 2.0% (this rate was .1% lower than last month’s 2.1%). Or you can look at it another way. We usually place people who have college degrees. That unemployment rate in February was also2.0% (this rate was the same as last month’s 2.0%).
Now stay with me a little longer. This gets better. It’s important to understand (and none of the pundits mention this) that the unemployment rate, for many reasons, will never be 0%, no matter how good the economy is. Without boring you any more than I have already, let me add here that Milton Friedman (the renowned Nobel Prize-winning economist), is famous for the theory of the “natural rate of unemployment” (or the term he preferred, NAIRU, which is the acronym for Non-Accelerating Inflation Rate of Unemployment). Basically, this theory states that full employment presupposes an ‘unavoidable and acceptable’ unemployment rate of somewhere between 4-6% with it. Economists often settle on 5%, although the “New Normal Unemployment Rate” has been suggested to fall at 6.7%.
Nevertheless (if you will allow me to apply a ‘macro’ concept to a ‘micro’ issue), if this rate is applied to our main category of Management, Professional and Related types of potential recruits, and/or our other main category of College-Degreed potential recruits, because of the COVID-19 shutdown, we are not that far above the 4-6% threshold for full employment…and that will change as soon as we all return to work!
THE IMPORTANCE OF GDP
“The economic goal of any nation, as of any individual, is to get the greatest results with the least effort. The whole economic progress of mankind has consisted in getting more production with the same labor…Translated into national terms, this first principle means that our real objective is to maximize production. In doing this, full employment—that is, the absence of involuntary idleness—becomes a necessary by-product. But production is the end, employment merely the means. We cannot continuously have the fullest production without full employment. But we can very easily have full employment without full production.”
–Economics in One Lesson, by Henry Hazlitt, Chapter X, “The Fetish of Full Employment”
On February 23rd, 2023, the real gross domestic product (GDP) increased at an annual rate of 2.7% in the fourth quarter of 2022, according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2%.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.9%. The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, were revised up.
The increase in real GDP in the fourth quarter reflected increases in private inventory investment, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by decreases in residential fixed investment and exports. Imports decreased.
The increase in private inventory investment was led by manufacturing (mainly petroleum and coal products) as well as mining, utilities, and construction industries (led by utilities). The increase in consumer spending reflected an increase in services that was partly offset by a decrease in goods. Within services, the increase was led by health care as well as housing and utilities. Within goods, the leading contributor to the decrease was “other” durable goods (mainly jewelry). Within nonresidential fixed investment, increases in intellectual property products (mainly software) and structures were partly offset by a decrease in equipment. Within federal government spending, the increase was led by nondefense spending. The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees.
Within residential fixed investment, the leading contributors to the decrease were new single-family construction and brokers’ commissions. Within exports, a decrease in goods (led by nondurable goods excluding petroleum) was partly offset by an increase in services (led by travel as well as transport). Within imports, a decrease in goods (led by durable consumer goods) was partly offset by an increase in services (led by travel).
Compared to the third quarter, the deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports and decelerations in consumer spending, nonresidential fixed investment, and state and local government spending. These movements were partly offset by an upturn in private inventory investment, a smaller decrease in residential fixed investment, and an acceleration in federal government spending. Imports decreased less in the fourth quarter than in the third quarter.
Updates to GDP
With the second estimate, downward revisions to consumer spending and exports were partly offset by upward revisions to nonresidential and residential fixed investment. Imports were revised up.
GDP for 2022
Real GDP increased 2.1% in 2022 (from the 2021 annual level to the 2022 annual level), compared with an increase of 5.9% in 2021. The increase in real GDP in 2022 primarily reflected increases in consumer spending, exports, private inventory investment, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and federal government spending. Imports increased.
Measured from the fourth quarter of 2021 to the fourth quarter of 2022, real GDP increased 0.9% during the period, compared with an increase of 5.7% from the fourth quarter of 2020 to the fourth quarter of 2021.
* * *
Next release, March 30, 2023, at 8:30 a.m. EDT
Gross Domestic Product (Third Estimate)
Corporate Profits
Gross Domestic Product by Industry
Fourth Quarter 2022 and Year 2022
IT IS IMPOSSIBLE FOR UNEMPLOYMENT EVER TO BE ZERO
‘Unemployment’ is an emotional ‘trigger’ word…a ‘third rail’, if you will. It conjures up negative thoughts. But it is important to realize that, while we want everyone who wants a job to have the opportunity to work, unemployment can never be zero and, in fact, can be disruptive to an economy if it gets too close to zero. Very low unemployment can actually hurt the economy by creating an upward pressure on wages which invariably leads to higher production costs and prices. This can lead to inflation. The lowest the unemployment rate has been in the US was 2.5%. That was in May and June 1953 when the economy overheated due to the Korean War. When this bubble burst, it kicked off the Recession of 1953. A healthy economy will always include some percentage of unemployment.
There are five main sources of unemployment:
1. Cyclical (or demand-deficient) unemployment – This type of unemployment fluctuates with the business cycle. It rises during a recession and falls during the subsequent recovery. Workers who are most affected by this type of unemployment are laid off during a recession when production volumes fall, and companies use lay-offs as the easiest way to reduce costs. These workers are usually rehired, some months later, when the economy improves.
2. Frictional unemployment – This comes from the normal turnover in the labor force. This is where new workers are entering the workforce and older workers are retiring and leaving vacancies to be filled by the new workers or those re-entering the workforce. This category includes workers who are between jobs.
3. Structural unemployment – This happens when the skills possessed by the unemployed worker don’t match the requirements of the opening—whether those be in characteristics and skills or in location. This can come from new technology or foreign competition (e.g., foreign outsourcing). This type of unemployment usually lasts longer than frictional unemployment because retraining, and sometimes relocation, is involved. Occasionally jobs in this category can just disappear overseas.
4. Seasonal unemployment – This happens when the workforce is affected by the climate or time of year. Construction workers and agricultural workers aren’t needed as much during the winter season because of the inclement weather. On the other hand, retail workers experience an increase in hiring shortly before, and during, the holiday season, but can be laid off shortly thereafter.
5. Surplus unemployment – This is caused by minimum wage laws and unions. When wages are set at a higher level, unemployment can often result. Why? To keep within the same payroll budget, the company must let go of some workers to pay the remaining workers a higher salary.
Other factors influencing the unemployment rate:
1. Length of unemployment – Some studies indicate that an important factor influencing a worker’s decision to accept a new job is directly related to the length of the unemployment benefit they are receiving.
Currently, workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program, although seven states provide fewer weeks, and one provides more. Extended Benefits (EB) have triggered on in 14 states plus the District of Columbia and the Virgin Islands. Additional weeks of federal benefits are also available through September 6, 2021.
Studies suggest that additional weeks of benefits reduce the incentive of the unemployed to seek and accept less-desirable jobs.
2. Changes in GDP – Since hiring workers takes time, the improvement in the unemployment rate usually lags the improvement in the GDP.
WHERE RECRUITERS PLACE
Now back to the issue at hand, namely the recruiting, and placing, of professionals and those with college degrees.
If you look at the past 23 years of unemployment in the February “management, professional and related” types of worker category, you will find the following rates:
February 2022 2.2%
February 2021 3.2%
February 2020 1.8%
February 2019 2.0%
February 2018 2.0%
February 2017 2.1%
February 2016 2.4%
February 2015 2.7%
February 2014 3.2%
February 2013 3.8%
February 2012 4.2%
February 2011 4.4%
February 2010 4.8%
February 2009 3.9%
February 2008 2.2%
February 2007 1.9%
February 2006 2.1%
February 2005 2.5%
February 2004 2.7%
February 2003 3.1%
February 2002 2.8%
February 2001 1.8%
February 2000 1.6%
Here are the rates, during those same time periods, for “college-degreed” workers:
February 2022 2.2%
February 2021 3.8%
February 2020 1.9%
February 2019 2.2%
February 2018 2.2%
February 2017 2.4%
February 2016 2.5%
February 2015 2.7%
February 2014 3.4%
February 2013 3.9%
February 2012 4.2%
February 2011 4.3%
February 2010 4.9%
February 2009 4.2%
February 2008 2.1%
February 2007 1.9%
February 2006 2.2%
February 2005 2.4%
February 2004 2.9%
February 2003 3.0%
February 2002 2.8%
February 2001 1.6%
February 2000 1.6%
The February 2023 rates for these two categories, 2.0% and 2.0%, respectively, are pretty low. But regardless, these unemployment numbers usually include a good number of job hoppers, job shoppers and rejects. We, on the other hand, are engaged by our client companies to find those candidates who are happy, well-appreciated, making good money and currently working and we entice them to move for even better opportunities—especially where new technologies are expanding. This will never change. And that is why, no matter the overall unemployment rate, we still need to MARKET to find the best possible job orders to work and we still need to RECRUIT to find the best possible candidates for those Job Orders.
Dan Regovich – AJ Augur Group LLC – Plastics Search & Recruitment Experts – Plastics Recruiters – Plastics Headhunters – 440-357-7600 – dregovich@ajaugur.com