Economists said the job market appears to be in the same state as it was prior to the onset of the Covid-19 pandemic: low unemployment and ample job opportunities. Despite this, individuals' confidence had dropped due to financial pressures such as increased interest rates and rising inflation rates.
Despite economists noting the job market remaining strong, it appears that workers don't share the same opinion. Last month, employee confidence plummeted to its lowest rate since 2016, according to Glassdoor data. Nearly half of workers indicated a positive outlook towards their employers within the next six months which was down from 54% the year before. Likewise, the ZipRecruiter Job Seeker Confidence index dropped six points in the second quarter to its lowest point since 2021. It may be that the current job market is not as strong as what was seen in 2021 and 2022, putting more financial strain on job seekers as they put more effort into their job search. However, Julia Pollak, chief economist at ZipRecruiter, believes that workers still have greater job security and leverage than before the pandemic.
An example of this is inflation causing the Federal Reserve to raise borrowing costs as a measure to balance out the economy and keep consumer prices steady. A consequence of this is that interest rates, such as those related to mortgages and credit cards, have become more expensive for customers. As a consequence of this, savings rates have decreased dramatically. This month, student loan payments have started again.
Economists noted that several metrics, from job openings to quits to layoffs to the unemployment rate, illustrate the labor market is in a good state. Daniel Zhao, the main economist at Glassdoor, declared that while it is somewhat weaker, it is also stable. Zhao said that when the report card is viewed as a whole, all indicators point to an environment that is not running at breakneck speed, but is in a solid position. All told, these numbers are either in line with or better than prior to the pandemic, a period which saw the lowest unemployment rate in history, people steadily entering the workforce, as well as gradual shrinkage in gender and ethnic disparities in the workplace, according to Pollak.
She said that it was a very good thing that the quits rate, a measure of employees' eagerness or capability to leave their jobs, was 2.3% in August, the same as February 2020, according to the U.S. Department of Labor’s Tuesday report. The quits rate was steady between July and August, though it had risen to its peak, 3%, in April 2022 during what was later referred to as the great resignation. The hiring rate was slightly lower than its February 2020 level, but layoffs are still 15% lower than pre-pandemic levels, while job openings, a signal of employers’ need for personnel, have increased by 37%, per the Labor Department’s figures.
The Labor Department reported Tuesday that job openings rose considerably in August, increasing by 690,000 for a total of 9.6 million. However, economists cautioned that this data series is usually volatile and the bigger picture is apparent - job openings, hirings, and quits are all the way down from where they were during the pandemic. "I think many people are comparing the labor market now to one or two years ago when it was in better condition," Zhao commented. "But there were most certainly economic issues in 2021 and 2022 as well."
Inflation surpassed its highest rate since 1981 in a way that undercut the wage increases workers had enjoyed and caused certain industries, like tech, to hire so much that they had to lay off many employees. Zhao added that a labor market that gets too heated can be unsustainable as job vacancies and wages both increase and result in more inflation (which may or may not have been the case this time). He concluded by saying that although people don't find work and raises as easily as before, the labor market is in a better state. Economists are unsettled by the future of the labor market due to events like interest rate hikes, an auto worker strike, expensive oil, and the possibility of another government shutdown in the coming months.
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