Navigating the Future: Exploring Latest Job Market Trends
In today's ever-changing job market, economic uncertainty has become a pervasive force that affects individuals, businesses, and economies on a global scale. Check out Web Scribble's Job Market Update to learn how to support your members.
In today's ever-changing job market, economic uncertainty has become a pervasive force that affects individuals, businesses, and economies on a global scale. As technological advancements, geopolitical tensions, and unexpected events reshape the world, the stability and predictability once associated with career paths have given way to a landscape filled with ambiguity and volatility. Job seekers and employees now navigate an intricate web of shifting demands, evolving industries, and uncertain prospects. This era of economic uncertainty in the job market has placed immense pressure on individuals to adapt, up-skill, and remain resilient in the face of constant change. In this context, understanding and effectively responding to the challenges presented by the current economic uncertainty has become a crucial aspect of navigating the ever-evolving world of work.
Web Scribble CEO and Co-founder, Alexey Gutin, recently shed some light on the current state of the labor market, some of the hiring trends that we're seeing, and recapped some key industries that our association partners belong to, in an effort to help associations best support their members during this uncertain time.
A Look into 2021 and 2022
2021 and 2022 were somewhat similar years in terms of tremendous hiring growth in many industries. 2022 ended up being very much of a job seeker’s market. Job postings were elevated from pre-pandemic levels, even though job postings slowed a little compared to 2021, many industries returned to pre-pandemic hiring levels. Employers in December added almost a quarter million jobs, as the unemployment rate dipped unexpectedly in December to about three and a half percent. By the end of last 2022, we experienced high inflation, and interest rates were going up - which meant economic headwinds could be on the horizon and employers needed to strategize.
Many saw the tech sector starting to pull back hiring significantly and layoffs began to occur. This was mainly due to the fact that their growth was funded by debt and since interest rates were on the rise, it made it very expensive. With all of the uncertainty around cash flow, it made it increasingly harder to get additional funding to sustain that growth.
Other industries started to brace themselves for economic headwinds. It’s important to note that the layoffs that have occurred in 2022 and the first half of this year are pretty small by comparison to how much job growth the same companies had in the two years prior.
First Half of 2023
The job market began to change in the first half of 2023. We're still seeing the labor market continue to add a lot of jobs at record speeds, especially compared to pre-pandemic levels, indicating that we are still in a very tight labor market. Unemployment still remains quite low. The private sector has recovered almost all the jobs that were lost during the pandemic. The public sector has only recovered about 58% of their jobs.
A couple of major things changed in the first half of this year. The labor participation rate dropped really significantly during COVID and wasn't recovering even through late 2022. Now, in 2023, the labor participation rate continues to tick upwards with significant improvement among prime-age and older workers. This recovery is in the favor of employers, with more people coming into the workforce.
One of the major contributors of inflation is wage growth. In 2021 and in 2022, wage growth was growing very significantly. And while it's still growing in the first half of this year, the rate at which wages are growing has pulled back pretty significantly. From a non-employment rate perspective, we're at really historically low levels that we have been for basically all of 2022 and all of 2023, so far.
In 2020, there was a huge spike in unemployment due to COVID-19, but there was a very quick recovery. Right now, in 2023, we’re experiencing record levels of low unemployment. Pre-pandemic, we were just north of four percent, and that was considered a competitive hiring environment from an employer standpoint.
Pre-pandemic, the job market was considered a job seeker’s market. Now, in 2023, it’s even more competitive in terms of unemployment levels. Part of that is due to some of the workers that left the workforce during the pandemic are starting to join the workforce again, also contributing to a lower unemployment rate in 2023, prior to the unemployment rate in 2020.
Job opening levels still remain very high, despite the layoffs that many of us hear about. Job openings peaked in the spring of 2022 across all industries. When companies started suspecting that the Federal Reserve was going to start increasing interest rates, and they did, just three months later, companies began to get into a holding pattern and pulled back on some of their hiring initiatives. In 2023, we are starting to see a decline in the number of job openings, but job openings are still significantly higher than pre-pandemic levels and are historic levels compared to the last two decades. The thought in the industry is that job openings will probably slowly decline to the 2019-2020 pre-pandemic levels.
Prime-Age Labor Force Participation Rate
The Prime-Age Labor Force Participation Rate refers to the percentage of individuals within the prime working age group who are either employed or actively seeking employment. The prime working age typically encompasses individuals between the ages of 25 and 54 years old, as they are considered to be in their peak years of productivity and labor market engagement. Monitoring the prime-age labor force participation rate provides insights into the level of engagement and attachment of this critical demographic group to the labor market, reflecting economic conditions, workforce trends, and societal factors that influence their decision to participate in the workforce.
The prime-age labor participation rate dropped very significantly during COVID and was very slow to recover. In fact, in October, November, December of last year, it was declining, and employers were very uncertain of what was going to happen and was uncertain that the prime-age labor participation rate was going to continue. Many wondered if it was going to continue to decline, maybe flatten, or increase.
The prime-age labor participation rate plays a significant role in labor demand and supply mismatch. We’ve seen a very significant uptick in the prime-age labor participation rate in the first half of this year. What’s the cause? Immigration policies were eased, and we have more people coming into the U.S. to join the workforce, with many on visas. We’re also seeing many older workers reentering the workforce, as well as inflation driving workers to return to the workforce to have a second household income.
The forecast for the prime-age labor participation rate is that it is going to continue growing for the second half of 2023. We are certainly above pre-pandemic levels in terms of prime-age labor force participation.
Job Seeker Resignation Trends
The phenomenon known as the "Great Resignation" had a significant impact on the job market throughout 2021 and 2022. The Great Resignation refers to a widespread trend of employees voluntarily leaving their jobs in large numbers, driven by a variety of factors. One of the primary catalysts for this movement was the COVID-19 pandemic, which prompted individuals to reevaluate their priorities, work-life balance, and career aspirations. As the pandemic brought about a shift towards remote work and flexible arrangements, many employees became more willing to seek out better opportunities, career growth, or alternative work arrangements.
The Great Resignation created labor shortages in various industries and sectors, as companies faced difficulties in retaining their existing workforce and attracting new talent. 46.6 million Americans left their job in 2022. This led to increased competition among employers to attract and retain skilled workers, resulting in higher wages, improved benefits packages, and other incentives to entice potential employees.
Now, in 2023, larger prime-age labor participation and economic uncertainty has led to many employees deciding to stay put in their current roles. For the first half of 2023, resignations have continued to slow significantly, nearly reaching pre-pandemic levels in April 2023. Employers that were struggling to retain talent in 2021 and 2022 are now finding it easier to retain talent and do not have to worry as much about backfilling roles. Additionally, if employers want to grow their headcount, it’s a little bit easier than it has been the last two years.
Job Posting Trends
From a job posting perspective, many of the biggest job boards in the United States are experiencing a pullback in terms of job posting volume. This year, job board companies are seeing about a 15 percent decline year over year in total job postings. Many employers that used to be putting budget towards advertising jobs and making sure that they outrank others in the search results and on other job board sites are either spending less or not spending at all. This causes an increase in applicant traffic of candidates that are entering the funnel, either at a lower cost or even sometimes free. The decrease in total job postings is likely a combination of recent budget cuts, as well as the decreasing demand for new hires than what it has been in previous years.
Hiring Trends in Healthcare
Healthcare remains a very robust and growing industry across all professions. In fact, the healthcare demand is stronger than the overall labor market. There is a national shortage of healthcare professionals in all specialties from physicians to social workers and more.
Hiring Trends in Business Services
Business services is a broad category that includes accounting, banking and finance, legal, marketing, and software development. Overall, we are seeing that demand in the business service sector has pulled back significantly in the back half of last year through the first half of this year. This is largely driven by the technology sector, with many of the hiring halts and layoffs happening across the industry. There’s less demand to hire for these roles compared to last year. Banking and financial services, as well as marketing, are at pre pandemic levels, or lower depending on how this trend continues throughout this year. Accounting and software development have also significantly pulled back in terms of hiring demand. Overall, compared to 2021 and 2022, many of our association partners saw a tremendous influx of hiring demand for these categories, but now, we are starting to see the demand levels slow and come back to the 2020 levels that we saw before businesses shut down in 2020.
Hiring Trends in Education
This education industry is continuing to be pretty resilient. States across the U.S. cited teacher shortages in 2022, with many school districts struggling with vacancies. Some of the demand has been erased in Q2 of 2023, but overall hiring levels remain significantly elevated compared to 2020.
Hiring Trends in STEM
Hiring demand in STEM peaked in Q1 of 2022 and has seen a significant decline in the last 12 months across most specialties, likely due to the amount of hiring pullback in the tech sector. Many tech companies that we’re hiring in 2020 and 2021 were most likely over hiring and had to make adjustments quickly in 2022 and 2023. Certain factors within STEM are disproportionately affected negatively due to the tremendous amount of hiring that happened in 2021 and 2022, but there’s certain sectors that are pretty resilient, for example electrical engineering, which has had a very small decline year over year. And then sectors like civil engineering are actually growing. Like with many of the other industries, we’re seeing STEM hiring demand come back to the 2020 levels which were still quite competitive.
What Does This Mean For Your Members?
Many members are most likely staying put in their current roles due to economic uncertainty. Members might not be willing to take the next job that pays a little bit more, and would rather stay where they are to not risk a layoff and keep the stability for their families.
Some members have likely experienced a layoff and need their association’s support to help them find their next role or connect with others who have experienced something similar. Many members are looking for guidance on how to navigate the current hiring climate and the associations are a great resource to members who need support finding their next opportunity.
Many employers are reluctant to hire aggressively like they did in 2021 and 2022, mostly because they're not sure if they are going to experience economic headwinds. Many companies want to avoid having to do a layoff, but also don't want to spend large budgets in recruitment advertising on hires that will ultimately need to be laid off. In many cases, it seems as though there is a recession that is looming over us.
Some sectors that we're seeing certainly experienced layoffs, and your your members need your support there, help them find that next role, or maybe navigate to a different slightly different career path or a slightly different specialty, or get them continuing education or certifications to help them land that next role.
Out of our association partners surveyed on our recent webinar, 75 percent said that they are seeing their members staying put in their current roles, whereas the other 20 percent of members are looking for their next opportunity. When it comes to benefits and support that associations can provide members, networking and mentorship was at the top of the list, as well as in-person events, career guidance support, and educational and certification opportunities. When asked about member retention and whether it was harder, easier, or about the same as last year, it seems like associations are around the same in terms of member retention and that even with this ever-changing and uncertain time, it seems as though member retention has been the same as last year. and is still how it has been prior to this year.
How Your Association Can Better Support Your Members
With the current uncertainty of the job market, members need your support more than ever. Many members might want to explore things like if they are being paid fairly or if they can get a promotion within their current role. Maybe they’re looking for a mentor or want to learn how to better their education to learn a new skill or qualify themselves for their next career move. Perhaps they’re looking for ways on how to progress in their professions and want tips on how to get their resume ready. As a professional association, you are the best source of information for your members and can have all of the information they are looking for in one place.
With a sophisticated career center, you can provide members with the tools they need to find their next job opportunity, get their next role, and perform better on the job. With a Web Scribble career hub, members and job seekers have a customized, fully integrated, easy-to-use career center and your association becomes the go-to resource for all things career related.
For the past two years, we have been making upgrades to our product to better serve the job seeker and enhance the member experience. Career Guides is one of our latest improvements that can give members deep insight into any career that they want to explore during their job search. With this tool, they can explore detailed and localized salary, benefits, skills, education and experience data for each specific job title searched. Career Guides pairs perfectly with our Career Paths tool - the fully-customized career planning tool that helps members explore and path their next career steps.
Are you ready to offer your members better benefits, increase member retention, member engagement, and ultimately help your members find their next great career opportunity or help them get that next promotion within their current company? Let’s chat!