- Workers Are Losing Power in the Job Market. That’s Good News for the Fed
The balance of power in the jobs market is slowly tilting back toward employers as companies become choosier with their hires and workers turn more cautious about quitting.
A labor leverage ratio developed by ex-senior White House economist Aaron Sojourner that compares the level of quits to layoffs has retraced about two-thirds of the rise seen in 2021 and into 2022. The ratio surged when companies ramped up staffing after pandemic-driven lockdowns and workers were enjoying outsized pay offers for their services.
The shift in the tug-of-war in the jobs market is not great news for employees: While wage gains on average have begun to outstrip inflation, workers have still not made up the ground they lost when prices surged coming out of the worst of the pandemic.
But the tilt is likely to be welcomed by Federal Reserve Chairman Jerome Powell and his central bank colleagues. They’ve openly fretted about what they see as a too-hot jobs market and the implications that carries for labor costs and inflation.
“There has been some loosening in labor-market conditions,” Powell told reporters on June 14 after the central bank left interest rates unchanged for the first time in 11 meetings. “We need to see that continue.”
Amy Laiker, who heads the New York office of Tiger Recruitment, has seen the tilt in the labor market first hand.
A year ago, “if a company didn’t respond within 24 hours after someone had an interview with them or they didn’t make a decision within a week on whether they wanted to hire them, that candidate was gone,” she said. “Whereas now, they can go a week, two weeks, three weeks, sometimes even four weeks. And that candidate’s probably still out there in the market.”
The shift in the balance of power is slowly starting to affect wages. Worker compensation grew 4.8% in the first quarter from a year ago, down from a 5.1% pace in the previous quarter, Labor Department data show. That’s still well above the 2.7% gain seen in 2019, before the pandemic.
Some salary measures have shown steeper declines in growth rates, especially wages for employees who change jobs.
“Pay growth is slowing substantially, and wage-driven inflation may be less of a concern for the economy despite robust hiring,” said Nela Richardson, chief economist at payroll management company Automatic Data Processing Inc.
Source: Bloomberg
2. Nearly 80% of women’s jobs could be disrupted, automated by AI
The labor force participation rate for women between 25 and 54 years old set a record high in April and then again in May, rebounding from the pandemic “she-cession” and returning to its pre-pandemic form of making progressively historic labor market gains.
That could all change with AI.
Generative artificial intelligence technologies like ChatGPT have the potential to transform the labor market, exposing the majority of the nation’s jobs to automation, Goldman Sachs economists have projected. The technology can create new content — such as text, images, audio, video, and code — from training data that includes examples of that desired output.
However, recent research shows that although outnumbered by men in the US workforce, women could be disproportionately affected by businesses’ adoption of generative AI: One recent analysis estimates that 79% of working women (nearly 59 million) are in occupations susceptible to disruption and automation. That’s compared to 58% of working men, according to research from the University of North Carolina’s Kenan-Flagler Business School.
A higher percentage of working women are employed in white-collar jobs, whereas for men it’s more of a 50-50 split between white- and blue-collar occupations, said Mark McNeilly, professor of the practice of marketing at the Kenan-Flagler school and lead author of the AI research. Some of the most AI-exposed occupations with a majority-female employee base are office and administrative support; healthcare practitioners and technical; education, training and library; health care support; and community and social services, according to the UNC Kenan-Flagler research.
“It’s not always going to relate to ‘I’m losing my job,’” McNeilly told CNN. “I think it’s really a matter of if there’s something that the person can do to add value.”
Source: CNN Business
3. AI and the Changing Dynamics of the Job Market
Artificial Intelligence (AI) has rapidly transformed various industries, revolutionizing the way we work and interact. As AI continues to advance, its impact on the job market becomes increasingly significant. In this article, we delve into the dynamic relationship between AI and the job market, exploring its potential implications and the changing landscape of employment.
Enhancing Efficiency and Automation:
AI technologies have the power to automate repetitive tasks and streamline processes, leading to increased efficiency and productivity. From chatbots that handle customer inquiries to machine learning algorithms that analyze vast amounts of data, AI is reshaping the way businesses operate. While this automation brings undeniable benefits, it also raises concerns about job displacement and the need for upskilling.
The Rise of New Opportunities:
While AI may eliminate certain job roles, it also creates new avenues for employment. As AI systems become more prevalent, there is a growing demand for skilled professionals who can develop, implement, and maintain these technologies. Roles such as AI engineers, data scientists, and AI trainers are on the rise, offering exciting opportunities for those with the right expertise. Adaptability and a willingness to learn will be crucial in navigating the evolving job market.
Reshaping Job Roles and Skill Requirements:
AI’s integration into the workforce is reshaping job roles and skill requirements across industries. Routine tasks that can be automated are likely to be replaced by AI systems, while jobs that require creativity, critical thinking, and emotional intelligence are expected to thrive. Soft skills such as adaptability, problem-solving, and collaboration are becoming increasingly valuable alongside technical expertise. The ability to work alongside AI systems and leverage their capabilities will be a crucial skill set for the future workforce.
Ethical Considerations and Human Collaboration:
As AI technologies advance, ethical considerations come to the forefront. Questions surrounding data privacy, bias in algorithms, and the ethical use of AI raise important discussions. While AI can augment human capabilities, it cannot replace the unique qualities and perspectives that humans bring to the table. Collaborative efforts between humans and AI systems will be essential to leverage the benefits of AI while ensuring ethical and responsible practices.
In conclusion, the dynamic relationship between AI and the job market is transforming the way we work. While AI automation may lead to job displacement, it also creates new employment opportunities and reshapes job roles and skill requirements. Adapting to this changing landscape requires a combination of technical expertise, soft skills, and ethical considerations. By embracing AI as a collaborative tool, we can harness its potential to drive innovation and create a future where humans and AI systems work together harmoniously.
Source: Medium
4. 5 signs the job market is cooling despite the blockbuster May jobs report
The May employment report, released Friday, appeared to show the nation isn’t close to tipping into recession with employers adding a booming 339,000 jobs.
Beneath the surface, however, were signs the labor market is softening as the unemployment rate rose sharply and the average work week declined to a three-year low.
“Under the hood, things are not as buoyant as the headline suggests,” economist Bob Schwartz of Oxford Economics wrote in a note to clients. The mixed messages present a conundrum for a Federal Reserve wrestling with whether to pause its aggressive flurry of interest rate increases this month or continue to hike rates to cool the economy and, more critically, inflation.
May’s unemployment rate jumped from a five-decade low of 3.4% to a still healthy 3.7% as employment declined by a net 310,000 jobs, according to Labor’s household survey.
The jobless rate is based on a survey of 60,000 households and is generally considered less reliable than the poll of 122,000 business and government agencies that produced May’s headline job gain of 339,000.
The average number of hours U.S. employees worked dipped from 34.4 to 34.3 in May, the lowest level since the early days of the pandemic in April 2020. That shows consumer demand may be easing but employers are opting to hold onto workers – a practice known as labor hoarding – because of persistent COVID-related worker shortages the past couple of years, Bank of America suggests. Instead, they’re trimming the hours of existing employees.
Average hourly earnings increased 0.3% in May, a slowdown from the 0.4% rise the prior month. That shows wage pressures are easing as employers’ bargaining power strengthens in a cooling market, Schwartz says.
The share of unemployed workers finding a job fell to 25.8% last month, the lowest level since August 2021, data from Oxford and The Liscio Report, a research publication, show. In other words, businesses are hanging onto the workers they have but they’re becoming warier about bringing on new employees.
As a result, jobless workers are idled longer. The average duration of unemployment increased for the third straight month, from 19.3 weeks in February to 21.2 weeks in May, according to Oxford and Labor figures.
Source: USA Today
5. Discriminated against solely based on their age: young people should have the same rights in the labour market
The EU and Member States need to put an end to discriminatory practices against young people, such as low youth minimum wages and unpaid traineeships. Young people also need to be more directly involved in designing policies, especially those affecting them, the European Economic and Social Committee (EESC) said on 15 June.
These demands, put forward by the EESC in two opinions adopted at its June plenary session, coincided with the European Parliament’s adoption of a report on quality traineeships, which on 14 June called on the Commission to propose a directive on the issue. The directive would make it illegal to employ interns and trainees for longer periods without pay – an issue for which youth organisations have advocated for quite some time.
Too many young people subject to lower minimum wages or undertaking unpaid internships have a negative experience of the labour market. We cannot be blind to this reality in Member States today, said Michael McLoughlin, rapporteur of the opinion The equal treatment of young people in the labour market.
We want the EU Institutions, Member States and social partners to examine this issue. We need to restore the faith of young people and reconnect many of them with the EU project, he stressed.
We need a lot of investment, but what has been done so far is not adequate, said Nicoletta Merlo, rapporteur of the opinion Cooperation on youth, requested by the upcoming Spanish Presidency of the Council of the EU, which aims to give a fresh impetus to the EU youth agenda.
Young people are also the focus of the political programme of the EESC’s new President, Oliver Röpke, who has put great emphasis on strengthening dialogue with young people and involving them in policy-making.
In a debate with youth organisations held during the plenary session, Mr Röpke said: We committed to a more inclusive model that puts young people at the heart of the engagement process. I have made it my political priority to open the doors of the EESC to young people, and I don’t intend to stop at EU borders. I want to reach out to youth organisations from candidate countries as well. Our future lies with youth, and it should be the youth deciding how they want this future to look.”
Source: EESC
