TOP 7 News About USA Job Market

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  1. The job market is making traders’ heads explode

The labor market ballooned in January when the US economy added an astonishing 517,000 jobs, blowing past Wall Street’s expectations. But at the same time, a slew of corporate layoff announcements have prompted questions about whether there could be a broad slowdown on the horizon.

In an assessment of fourth-quarter earnings calls, Goldman Sachs economists found that “many firms were pessimistic on the labor market,” though they noted that “a majority of firms are actually discussing the high profile [tech] layoffs themselves but not indicating that their own companies will be laying off or have laid off any workers.”

Still, the finance sector is also having a difficult time. Goldman Sachs CEO David Solomon cut about 3,200 jobs last month and JPMorgan recently laid off hundreds of mortgage employees.

Tech and finance layoffs do have a ripple effect, and CEOs expressed that concern during recent earnings calls.

“It’s hard to avoid all the headlines that we’re seeing day in, day out. And it’s fair to say that there have been a number of large names that have announced major layoffs,” said payroll processing firm ADP. “It’s tough to say that… Some of those people making those layoffs are our clients.”

Alaska Air Group noted a smaller number of tech workers and tech companies using their airline. In San Francisco, apartment rents have fallen and tech layoffs have further weakened the housing market.

While tech layoffs may not be a leading recession indicator, a decrease in manufacturing hiring could be an ominous sign of things to come.

The ISM manufacturing index declined by more than expected in January, to its lowest level since May 2020. Production, new orders, and employment components all weakened.

In fact, US manufacturing may have already contracted into a recession, said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

And manufacturing is typically where full recessions begin.

“Weak manufacturing order books flash a recession warning, indicating that Fed tightening may be having an effect and unemployment may soon rise, stamping out services momentum,” she said.

Investors looking for clarity on a confusing labor market are unlikely to find it in the frequently revised, high-frequency weekly jobless claims data on Thursday.

A recent rise in initial claims underscores that the rehiring rate has fallen, said Liz Ann Sonders, chief investment strategist at Charles Schwab. Most companies haven’t been laying off workers in massive waves, but those who have lost their jobs aren’t easily finding new ones as fast, she added.

Source: CNN Business

2. In an Uncertain Job Market, How Can Companies Retain Workers?

In absolute terms, resignations still far outnumber reductions — people are quitting at three times the rate of layoffs, said Anthony Klotz, an associate professor of organizational behavior at the University College London’s School of Management. (He coined the term the Great Resignation.) Indeed, the U.S. Labor Department’s January jobs report said employers had added over 500,000 jobs, exceeding expectations and bringing the unemployment rate down to 3.4 percent, the lowest since 1969.

Nonetheless, frequent headlines of work force reductions across industries may be having a cumulative effect on the collective labor market psyche. Although some workers — even unhappy ones — might decide to stick with their jobs when the market appears uncertain, news of layoffs can, conversely, spur more quitting.

Layoffs “create an environment where people worry it might happen to them next,” said Laszlo Bock, who was Google’s senior vice president for people operations before helping found the human resources platform Humu. Poorly handled reductions may “degrade trust in management as people start hearing rumors of further cuts,” he said, and “that in turn raises anxiety, which causes more people to quit.”

The most recent data shows that while quitting has slowed, it still surpasses prepandemic numbers, Professor Klotz said. The number of people quitting peaked at approximately 3.4 percent of the work force early in 2022; by November it had fallen to 2.9 percent. While that may not sound significant, it translates to more than four million workers per month.

Changes like these have, in reality, created a new floor as to what employees can expect — so these changes won’t necessarily solve attrition issues

Professor Klotz said leaders needed to be listening to their workers right now. “They need to ask, How are you experiencing the late pandemic, the cost-of-living crisis and other things going on in your life?” he said, adding that high levels of “burnout and stress are predictors of quitting.”

As a result, managers should be checking with their employees in one-to-one conversations as well as with large-scale questionnaires. The software giant HubSpot, for example, conducts quarterly employee engagement surveys. “We can get up to 7,000 comments and we literally read and analyze every single one of them to understand how we’re doing,” Eimear Marrinan, the company’s senior director of culture, said.

Just as reviews are critical, first impressions also count. The success of an employee’s initial months at a company — including the onboarding process — can determine whether an employee stays, said Ms. Fuentes of Hilton.

Companies striving to retain their employees should also focus on personal growth and development. Mr. Sull’s analysis found that providing lateral job moves was 12 times as important as promotions are in encouraging retention. “It’s important to let the employees know that someone is focusing on what they’re learning and that it’s going to pay off in the future,” Mr. Bock of Google said.

Source: The New York Times

3. U.S. labor market still tight; monthly producer inflation accelerates

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, offering more evidence of the economy’s resilience despite tighter monetary policy.

The reports, which followed data this week showing robust growth in retail sales in January and an acceleration in monthly consumer prices, further stoked financial market fears that the Federal Reserve could maintain its interest hiking campaign through summer.

“The headline-grabbing layoff announcements of the last few months do not seem representative of broader economic trends,” said Bill Adams, chief economist at Comerica Bank in Dallas.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 194,000 for the week ended Feb. 11, the Labor Department said. Economists polled by Reuters had forecast 200,000 claims for the latest week.

Unadjusted claims dropped 9,280 to 224,727 last week, reflecting a sharp decrease in applications in California. There were also significant declines in claims in Illinois and Pennsylvania, offseting increases in Ohio and Michigan.

Companies are generally reluctant to lay off workers after experiencing difficulties recruiting during the pandemic. The National Federation of Independent Businesses reported this week that the share of small businesses reporting job openings increased in January, saying this suggested that “owners are still seeing opportunities to grow their business.”

Government data showed this month that there were 1.9 job openings for every unemployed person in December.

“Labor market conditions remain exceptionally tight,” said Michael Pearce, lead U.S. economist at Oxford Economics in New York. “That is consistent with most other indicators which suggest that the labor market is still carrying plenty of momentum.”

The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 16,000 to 1.696 million during the week ending Feb 4.

Labor market resilience is marked by the lowest unemployment rate in more than 53 years. The Fed has raised its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December. Though two additional rate hikes of 25 basis points are expected in March and May, financial markets are betting on another increase in June.

Source: Reuters

4. Talent Boom Or Bust? What The February U.S. Jobs And Inflation Reports Say About The Labor Market

The reports show some signs of reduced tension on labor markets. For example, jobless claims rose for the first time in six weeks. Further, over the past 12 months, average hourly earnings increased by 4.4%, a lower average increase than reported during the summer (for example, 5.2% in July 2022).

However, labor markets remain tight and inflation remains high. Total nonfarm payroll employment rose by 517,000 in January, the unemployment rate showed little movement since early 2022, and the labor force participation rate remained steady and still below pre-pandemic levels. The number of job openings increased by 6.7% to 11.0 million in December, indicating companies had even more unfilled positions than before. Inflation, while trending down annually, jumped in the month of January.

Recent conversations with executives and board members across industries suggest five factors are behind these trends:

1. Tech represents a relatively small portion of the U.S. job market, so recent layoffs do not put a dent in employment figures: Estimates generally place 3% to 5% of the U.S. job market in the tech sector.

2. Industries are readjusting business models given new realities: Leaders across industries are adapting business models to new opportunities – and realities.

3. Industries that over-hired in the last two years are now adjusting: Many companies that rely on deeply technical talent (particularly technology, communications, and business services companies) over-hired during 2021 and 2022 to secure key resources, and now are correcting for more stable market conditions.

4. Industries that did not have access to talent in recent years are now filling roles: Companies in many industries relying on technical talent (including financial services, life sciences, healthcare, and manufacturing) did not have access to certain workers in 2021 and 2022.

5. Demographic changes create talent shortages: In many developed economies, large numbers of employees from the Baby Boomer generation have retired in recent years while members of the Millennial generation have moved past entry-level roles. 

Effective leaders understand that talent shortages are here to stay despite layoffs, and they predict that inflation – while declining slowly – will remain a factor in the medium-term.

Source: Forbes

5. In a tight labor market, some states look to another type of worker: Children

As local economies grapple with a tightening labor market, some state legislatures are looking to relax child labor protections to help employers meet hiring needs.

It’s part of a persistent trend in labor economics, experts say. When employers struggle to find talent, many prefer to hire younger, cheaper workers rather than increase pay and benefits to attract adults.

“Because of the high demand for workers, where there are holes in the system, unfortunately child laborers can get caught up in staffing some of those holes,” said David Weil, a professor of social policy and management at Brandeis University, and a former wage and hour administrator in the Labor Department.

Legislators in Iowa and Minnesota introduced bills in January to loosen child labor law regulations around age and workplace safety protections in some of the country’s most dangerous workplaces. Minnesota’s bill would permit 16- and 17-year-olds to work construction jobs. The Iowa measure would allow 14- and 15-year-olds to work certain jobs in meatpacking plants.

The Iowa proposal would also expand hours teenagers can work during the school year, and would shield businesses from civil liability if a youth worker is sickened, injured or killed on the job.

Schultz did not respond to requests for comment. Critics say the proposal is dangerous and would subject child workers to hazardous environments.

“Do you remember the images of children in manufacturing and other dangerous work situations from the early 1900s?” Connie Ryan, executive director of the Interfaith Alliance of Iowa, said in testimony to state lawmakers, according to Radio Iowa. “There is a reason our society said that it is not appropriate for children to work in those conditions.”

During hard economic times, some parents need their children to get a job or work more hours to help make ends meet, he added. And during periods of full employment — the U.S. unemployment rate of 3.4 percent is the lowest in decades — employers want a larger workforce to ease their hiring strains.

Experts say that can come at a high cost to children who take these jobs, and hurt the labor market’s long-term prospects.

Source: The Washington Post

6. U.S. jobless claims stay below 200,000 for fifth straight week: Labor market still healthy

The number of Americans who applied for unemployment benefits in mid-February stayed below 200,000 for the fifth week in a row, signaling the U.S. labor market is still quite strong.

New applications slipped to 194,000 from a revised 195,000 in the prior week, the government said Thursday.

Economists polled by the Wall Street Journal had forecast that new claims would total 200,000 in the seven days ending Feb. 11. The figures are seasonally adjusted.

New claims have ranged from a high of 241,000 to a low of 183,000 since Thanksgiving. By most measures, the labor market is still quite robust.

The number of people already collecting unemployment benefits, meanwhile, rose by 16,000 to a three-month high of 1.7 million in the week ending Feb. 4. They are reported with a one-week lag.

Jobless claims are one of the first indicators to sound the alarm when the U.S. is headed toward recession. So far they are not showing much trouble for the economy, notwithstanding a flurry of layoffs at large companies.

Yet hiring is bound to slow and layoffs rise, economists say, as higher interest rates mounted by the Federal Reserve depress economic growth. The Fed is raising rates to try to quell high inflation.

“Although company layoff reports are becoming more common, those layoffs are not yet showing up in the unemployment insurance data,” said Stuart Hoffman, senior economic adviser at PNC Financial Services.

Source: MarketWatch

7. Artificial Intelligence Jobs: How Will AI Change The Job Market?

With the release of OpenAI’s ChatGPT, many people wonder what jobs will be affected by this new technology.

ChatGPT is an example of a natural language processing (NLP) AI, which relies on deep learning to understand and interact with human text. It uses natural language understanding (NLU) to determine a user’s intent by analyzing the components of a sentence and implements natural language generation (NLG) to produce writing and summarize information.

It’s an example of what experts typically call narrow artificial intelligence, a type of AI that performs tasks and is limited to a specific application.

ChatGPT is an example of a natural language processing (NLP) AI, which relies on deep learning to understand and interact with human text. It uses natural language understanding (NLU) to determine a user’s intent by analyzing the components of a sentence and implements natural language generation (NLG) to produce writing and summarize information.

It’s an example of what experts typically call narrow artificial intelligence, a type of AI that performs tasks and is limited to a specific application. 

Similarly, HR departments can save time drafting easily replicated documents with AI. Some added benefits for HR teams may involve the hiring and interviewing process

Even though this may result in HR departments hiring fewer people, the advancements offered by AI will hopefully make those workers’ jobs more manageable.

Currently, ChatGPT is limited in innovating and finding new solutions to problems. It also can’t always offer users a code that is appropriate for their website or application context. The technology is not yet fool-proof, so it may always be necessary for a human to review code written by an AI.

Artificial intelligence is already changing numerous industries, from customer service to computer coding. With these changes, we’re seeing a growing sentiment of anxiety around job loss.

AI will undoubtedly take over some jobs, but many new jobs could also be created, particularly in AI development and deep learning. And, all the while, it’s here to help—such as investing with AI.

Source: Forbes

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