Co-founder of job search engine Adzuna. Present in 16 countries and helping 10s of millions of job seekers every month.
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The recent jobs report figures mask an out-of-kilter labor market. We’re seeing simultaneously high job openings and low hiring. Millions of Americans are quitting their jobs and not all of them are re-entering the labor market. And unemployment remains inflated.
Though the headlines read as though the labor market is healthy, we’re going through a sharp period of transformation and many of the numbers aren’t adding up — or even appear contradictory. In the 15 years that I’ve been monitoring the jobs market, it’s one of the most paradoxical sets of stats I’ve seen.
Subdued Employment
Despite the recent jump in employment, 8.7 million Americans remain unemployed in July, according to the U.S. Bureau of Labor Statistics (BLS). To put this into perspective, in February 2020, before the pandemic, 5.7 million Americans were unemployed. Further, 3.4 million people are on long-term unemployment, 2.3 million more than in February 2020, and long-term unemployment now accounts for a substantial portion of total unemployment, at 39.3%.
Employment is moving in the right direction, however. In particular, July saw increases in leisure and hospitality employment (up 380,000), driven by a 253,000 employment uptick in food services and bars. Local government education as well as professional and business services have also seen employment growth.
Record Job Openings
Perhaps counterintuitively, given elevated unemployment, the number of job opportunities on offer is high — and rising. U.S. job openings reached a record-breaking 10.1 million at the end of June, with 590,000 more job openings than the month before.
Low Hiring
The reason for this mismatch is that hiring isn’t keeping pace with job growth. The BLS data shows June saw 6.7 million hires, but that remains 3.4 million short of the number needed to fill open roles. Hiring volumes pale in significance next to the job openings on offer.
As a result, employers are becoming increasingly creative in attracting new joiners. From signing bonuses, on-the-job training, childcare support and opportunities for upskilling, organizations are competing to offer the most attractive packages to new workers.
High Quits
Quits are the final measure of note. The “great resignation” is still in full flow, with 3.9 million people quitting their job in June, up by 239,000. It is likely that this is partly a response to the glut of job opportunities on offer, with workers increasingly confident in their ability to find new and better jobs. Others are leaving and taking a career break due to burnout, job dissatisfaction, relocation or simply in search of a better work-life balance.
Meanwhile, layoffs are at a low, just 1.3 million in June, as employers cling onto their remaining workers amid the war for talent.
Rebalancing The Labor Market Equation
What are the missing factors needed to rebalance the jobs market?
The first is salary, and we’re already seeing wages push up as employers compete for staff. In particular, lower-paid industries are raising hourly pay rates, with big brands like Target, Best Buy and Costco all making moves to offer pay rates of at least $15 per hour.
The second factor, and one that is arguably harder to address, is job satisfaction. Millions of Americans, particularly those on the front line during the pandemic, are undervalued as well as underpaid. They may simply not want to continue in their current jobs.
Third, there’s a mismatch between job openings and workers with the right skills to fill them.
Part of the solution to this will come from considering whether people are actually needed to complete some of the more monotonous, lower-paid and less-desirable roles in the economy and if technology could be the answer to these worker shortages. Manufacturing, retail and service industries, all industries that have struggled to find enough staff to meet demand, are ripe for technological disruption. This may come in the form of apps or QR codes replacing wait staff in restaurants, chatbots taking the place of call centers or even mechanical butlers serving as hotel staff.
America also needs to address a crisis of worker confidence, particularly the growing concerns around the delta variant of Covid-19. This is about reassuring workers that returning to the office or taking a frontline job is safe. As a response, some organizations are asking their workers to prove they are vaccinated, including Walmart, United Airlines and even meatpacker Tyson Foods. Office-based companies, too, including Facebook and Google, are making jabs compulsory for U.S. workers who want to return to the office.
The Key Takeaway
The economy is recovering and jobs are being created, but worker confidence isn’t returning at the same pace. A rebalancing may be just around the corner. Our data suggests job seekers are starting to come back, and autumn 2021 may bring the correction needed to rebalance the market.
In the meantime, improvements to pay and benefits, and potentially the elimination of some of the more monotonous jobs with the help of technology, should mean job seekers return to more fulfilling and better-paying jobs. Hiring is likely going to be tough in the short term, but I believe the outlook for a few months down the line is optimistic.
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