It looks like we may finally be seeing a cool down in the white hot job market that has dominated headlines and befuddled central bankers since the US economy began its rebound following the peak of the pandemic.
One of the main signals that seems to indicate the pendulum is poised to swing back is the more than 600 thousand month-to-month reduction in job openings as of the latest report. Further, with the exception of January’s unseasonable outlier of a performance, the number of new job additions has been on a consistent downward trajectory since July.
Another potentially less publicized indicator that appears to reinforce the cool down narrative and may in fact have been a harbinger for the market shift, however, can be seen in management’s decreasing propensity to fill skill gaps by training existing employees, which is only now returning to pre-pandemic levels.
According to the latest survey on this topic conducted by The Harris Poll, 70% of hiring managers said they would prefer reskilling current workers and conducting training sessions internally in order to address knowledge/ability shortages as opposed to going with an outsider hire or contracting solution.
Prior to the latest report, however, that percentage had been climbing consistently for the last year and a half - from 72% in the first half of 2021, to 75% in the second half of 2021, up to a peak of 77% in the first half of 2022 before making a prominent drop down to 70% as of the most recently available data encompassing the second half of 2022.
Given that about 9 out of 10 hiring managers report that their companies foot the bill for all the additional internal training (more than half of which also provided that education and training directly instead of outsourcing it), these hiring managers and businesses were clearly making a calculation that the costs of doing so were preferable to competing on the open market for talent and existing expertise.
With more hiring managers now choosing to cast their lines into the labor pool than at any time since the height of the pandemic, that cost-benefit calculation seems to be in flux and will be interesting to track as data for the first half of 2023 becomes available.
Our guess is that hiring managers will continue turning to outside hires in greater numbers as the job market becomes more favorable to employers, and that employees who want to acquire additional skills will be doing so more often on their own initiative and/or on their own dime in the months to come.
New Jobs/Unemployment
The US added nearly a quarter million new jobs last month, which continued both the trend of job reports exceeding expectations as well as the downward trend in total new jobs added that we’ve been seeing since January’s unseasonably strong performance.
The unemployment rate also ticked back down a tenth of a point to reach 3.5%, which was the fifth time the unemployment rate was at or below this level in the last 8 months despite only hitting 3.5% 3 other times in the last 50 years.
Job Openings
The number of open jobs fell by more than 630k over the course of February, dropping from 10.6 million open positions at the end of January to 9.9 million as of the most recently available data.
Further, the hiring rate didn’t move much but was down a little bit over the month as well, dropping from 4.1% to 4.0%, with about 6.2 million hires occurring during the year’s shortest month relative to the 6.4 million hires that took place when January was on fire.
The reduction in hires was experienced fairly proportionally across the country, with the South and Midwest seeing a minus 0.1% hiring slowdown while the Northeast and the West saw a minus 0.2% reduction. The South maintains the strongest hiring rate at 4.4%, however, with the Midwest and West at 3.9% while the Northeast lags behind at 3.2%. The Northeast also saw the largest month-over-month dop at minus 0.2% compared to the 0.1% reduction experienced by the other regions.
Separations
Total separations were down a little over February, as well, falling to 5.8 million from about 5.9 million the month prior. The separation rate was essentially unchanged, albeit down slightly too, from 3.9% to 3.8%.
The number of job quitters rose slightly from 3.9 million to 4 million, but that figure is still significantly down from December at 4.7 million as the job market slows and concerns of economic downturn grow.
Layoffs and discharges went down by a couple hundred thousand from the month before, decreasing from 1.7 million to 1.5 million, though the rate was up a little from 0.9% to 1% by the end of February.
Inflation
CPI was up 5% over the past 12 months, which is down a point from February’s trailing 12 month inflation of 65.
Inflationary growth has slowed and receded significantly, but the question remains as to how long it will take for inflation to return to 3% to 4% a year.
Some factors, like falling energy prices and improvements in supply chain kinks seem to indicate a near-term return to normalcy, but other factors like historical precedent and China’s reemergence post-lockdown make it seem more likely that it will take more than a few years for inflation to return to its historical average.
Remote Work Perks
According to a recent piece from LinkedIn, some of the best perks and benefits to offer remote employees tend to be appreciated by employees regardless of their work location, including schedule flexibility; mental health services, especially those including telehealth offerings; professional development opportunities; and positive feedback.
There are, however, other great perks and benefits to offer remote employees that are more tailored to the needs and opportunities specific to remote workers, such as relocation assistance, travel insurance, visa application facilitation, and coworking memberships, for example.
Family Health & Fertility Benefits
The importance of family health and fertility benefits has been growing with nearly 9 out of 10 surveyed employers noticing and acknowledging the climbing stature these benefits are experiencing in terms of employee perception.
Competition for talent is contributing to the newfound prominence of these benefits offerings, as well, with 60% of surveyed employers planning to enhance their offerings in these areas in the near future.
Voluntary Benefits
More than half of all employees working for companies that meet the mid-sized criteria have purchased at least one voluntary benefit if given the opportunity to do so, and any employee that purchased one voluntary benefit more than likely purchased at least one additional voluntary benefit.
Hybrid Workaround
Not only have hybrid schedules proven exceedingly popular with employees, but the majority of surveyed CFOs are planning to cut their facilities expenses by at least 10% and about 80% of them see leaning on hybrid-schedules as a potentially viable means to achieve that goal. Win-win.
Mental Health Disconnect
Employers are underappreciating the value that employees perceive in robust mental health services as a part of benefits packages, with a majority of employees rating the offerings provided by their employer as insufficient.
This perception gap remains despite about 88% of surveyed employers claiming that they’d augmented their mental health offerings at some point in the last year.
Recruiting Gen Z
While the latest generation to flood into the workforce certainly has its share of relatively unique characteristics relative to the generations that have preceded it, the commonalities largely outweigh the differences.
These zoomers prize fair compensation and they’re not afraid to compare salaries and wages with co-workers, friends, and even strangers online. At the same time, members of Gen Z want schedule/work flexibility, professional development opportunities, and to work for a company that internally lives up to the standards it presents externally.
New EEOC Form Requirements
The US Equal Employment Opportunity Commission has loosely targeted mid-summer of this year to begin requiring all companies who meet any one of the following criteria to begin submitting EEO1 reports:
Job Applicant Rights
According to a new rule from the Consumer Financial Protection Bureau, any company that rejects a job applicant on grounds related to the applicant's credit report must provide the applicant with the name, address, and phone number of the credit rating agency that issued the report.
The new rule will go into effect as of April 23, 2023, but compliance won’t become mandatory until March 20, 2024.
Severance Agreements
The National Labor Relations Board issued a new ruling which invalidates severance agreement provisions that inhibit an employee’s ability to file lawsuits or otherwise interact with the NLRB in order to report potential violations.
Payroll Problems
Employers are required to meet certain standards as to when pay is due relative to when the work was performed as well as how frequently pay is due, so when employers fail to meet these standards, employees are legally due full restitution and in some cases more depending on the jurisdiction.
It’s worth noting that failure to make payroll as a result of lost access to funds, as initially appeared would be the case for many Silicon Valley Bank depositors prior to the federal government intervening, is not a defense that would be available to any company facing legal action for failure to pay due wages.
Electronic Filings
The IRS lowered the electronic filing threshold from 250 down to just 10 forms.
Beginning January 1st, 2024, any tax filing that includes 10 or more forms must be submitted electronically in order to be properly received and processed.
Multi-Layered Cybersecurity
The prevalence of malware detected on company devices dropped by more than 40% percent when 3 layers of security protection were utilized relative to devices with just 1 layer of security protection in place.
Ransomware Attacks
Nearly 3 out of 4 surveyed companies were victims of a ransomware attack in the last year, and nearly 40% of those companies who were attacked once were in fact attacked a second time.
Further, as it turns out, the more times that a company has been on the receiving end of a ransomware attack, the more likely they are to simply pay the ransom in order to retrieve whatever had been captured in the attack.
Artificial Intelligence
According to some sources, 85 million jobs are potentially set to be replaced by AI in the next several years, and the insurance and employee benefits industries are as primed as any to be revolutionized by these technologies as they emerge.
So far, fraud detection and prevention, customer communications, claims administration, and business process improvement have been some of the key areas where AI has proven most valuable in the insurance space.
Telehealth
The rate of adoption of telehealth services has been considerable, including 6 out of 10 Medicare Advantage users.
In fact, people who use telehealth services consider it an important factor that can sway their decision when choosing among insurance plans and service offerings. Telehealth usage also correlates with increased loyalty and a decreased propensity to jump from one provider to another.
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