The U.S. economy saw an unparalleled upheaval three years ago when millions of people departed from low-paying positions in favor of more promising ones. Simultaneously, a great deal of white-collar employees locked themselves into roles that offered them more flexibility—remote or at least hybrid.
One term for it was “great resignation.”
Economists claim that when we fast-forward to the present, the state of affairs is a mirror image. To be more precise, hardly any employees are quitting their jobs on average, even if they are not in danger of being laid off anytime soon.
The pace of hiring has also drastically decreased during the same period. Economists have started referring to it as the “great stay.”
The U.S. economy created 275,000 jobs in February, according to the Bureau of Labor Statistics’ report released on Friday. This figure was higher than the 198,000 analysts had predicted and up from a revised 229,000 jobs in January.
Together with an unemployment rate of 3.9%, which is often indicative of a robust labor market, the strong job growth numbers are coming into conflict with other, more concerning indicators.
According to Guy Berger, head of economic research at the labor research organization Burning Glass Institute, “we’re seeing that the job market is getting cooler.” “While not terrible, the job market now appears to be more similar to what we experienced in the middle of the decade rather than what we saw later in the decade or during the post-pandemic period.”
According to Mark Zandi, chief economist of Moody’s Analytics, the labor market confronts a unique mix of crosscurrents that make it difficult to forecast whether the economy will sustain its strength in the medium term and beyond.
Apart from the decrease in quits, he also pointed out that, in some cases, the number of hours worked has decreased to levels seen during a recession. The government released data on hours worked for manufacturing on Thursday, showing a 3.3% fall. This is the worst loss since the record drop-off in the second quarter of 2020.
According to Zandi, there has been an increase in the number of temporary job cutbacks, which often indicates that full-time post-cuts are imminent.
He said, “It feels fragile.”
At the same time, real layoff rates are still lower than pre-pandemic levels, despite several well-publicized reports indicating thousands of positions were cut over the previous year.
However, there are also indicators of deterioration here. Challenger, Gray & Christmas, a recruiting agency, said on Thursday that it had received the most layoff notices in February since the global financial crisis.
According to a statement from the company’s labor and workplace specialist, Andrew Challenger, “as we navigate the start of 2024, we’re witnessing a persistent wave of layoffs.” “Companies are adopting technological innovations and cutting costs aggressively, which is drastically changing the need for staffing.”
According to Zandi, companies’ profit margins are beginning to erode due to rising interest rate charges, which may further strain their payrolls.
“The market just feels like it’s all over the place,” he added in general.
Regretfully, it seems like finding a new job is taking longer if you’re seeking one. According to statistics from the Bureau of Labor Statistics, the proportion of those who have been unemployed for 15 to 26 weeks has increased by 53% since it peaked in March 2022.
“Aside from a few rather restricted industries, the prospects right now are more limited, whether someone has to find a new career or wants to find a better position,” Berger said.
The aging population is driving growth in the healthcare and social services sectors, which are hiring the most. Government services are also hiring, as evidenced by their generally lower salaries, which are becoming more appealing given the dearth of other new opportunities in the private sector, according to Berger.
Berger is hopeful that the “great stay” can continue since layoffs are still rare in the overall economy. Amazon is one company that has maintained a constant headcount while reducing payrolls from post-pandemic highs; these levels are nevertheless far higher than pre-pandemic levels.
In a conference call with reporters after the company’s quarterly results, Amazon’s chief financial officer, Brian Olsavsky, said, “We are investing, and we are adding in some areas.” However, most teams have a broad consensus that we should maintain the current level of headcount or even reduce it as we increase efficiency.
There’s still cause for some hope. There are still many more job opportunities than before the outbreak. During a second interview, Andrew Challenger said that the United States has had net new employment creation for three months running, with January marking a 12-month high of 353,000 jobs gained. The figure for January was changed to 229,000.
“It’s still a very good labor market,” he said. “People are staying; there are organizations that wish to retain their employees. However, there has also been a rise in layoffs. They don’t always need to be coupled; volatility might exist alone.”
However, in February, companies declared their intentions to recruit just 10,317 people, for a total of 15,693 reported hiring plans thus far in 2024, the firm discovered. This is the lowest year-to-date total for announced hiring plans since Challenger, Gray & Christmas started monitoring in 2009.
The overall image is still unique, according to Berger.
“There are relatively few new people coming in, but relatively few people are leaving,” he said. “It’s a weird environment.”
SOURCE: NBC NEWS
