Layoffs and Worker Shortages at the Same Time: A US Labor Market Update for Early 2023
February 8, 2023
It’s been an active and interesting start to the year for followers of the US labor market, with several notable data points all dropping in the space of a few weeks. Let’s consolidate and share the most notable labor market news and updates at the start of 2023 and then try to put these data together and present some thoughts for HR, talent, and business leaders.
Here are the five most important early 2023 labor market figures that you should know:
- The headline unemployment rate in the US dropped to 3.4% in January, the lowest level of unemployment since 1969
- In January, job growth was a remarkable 517,000 in January, led by gains in leisure and hospitality, professional and business services, and health care.
- Total job openings increased to 11.0 million on the last business day of December
- In December, the number of quits was little changed at 4.1 million. Over 4 million workers have voluntarily quit their jobs each month for the last 19 consecutive months
- Finally, weekly initial unemployment claims dropped to 183,000 for the last week in January, the lowest level since mid-April of 2022
Looking at the most recent data, collectively it describes a resilient, surprisingly strong labor market in the US, especially given the months of business leaders’ publicly opining about the chance of an economic recession, and the multiple reports of (mostly tech) industry layoffs and downsizing. From Amazon to Google to Meta to Salesforce (and many more), we’ve seen what seems like almost every major technology company downsizing their staffs, and CEO’s largely laying the blame on over hiring during the pandemic and to some vague notion of “future economic uncertainty”. I’d argue that the future is ALWAYS uncertain, and public company CEOs get paid the big bucks to navigate that uncertainty and make decisions that don’t end up resulting in having to layoff tens of thousands of workers. But that is a post for another time…
With unemployment as of January 2023 at a multi-generational low, having over 11 million open jobs, (which is near the all-time high for that series), and weekly initial unemployment claims now below 200,000 for multiple weeks in the latter half of January, the labor market data doesn’t point to a recession at all. Rather, it paints a picture of exceedingly tight labor markets, high demand for workers, and many workers, over 4 million each month, voluntarily leaving their jobs, usually to pursue other, better opportunities.
There continue to be examples all over the economy of worker shortages – across industries, locations, and skill levels. Walmart and CVS are reducing opening hours at their retail pharmacy locations due to a shortage of pharmacists. Ongoing shortages of skilled tradespeople – welders, pipefitter, carpenters. etc., are leading to delays in construction of new semiconductor manufacturing facilities, And the labor crisis is still impacting small, local establishments like a Denver, Colorado retail Wine and Spirits shop that is seeing it’s time to fill open jobs expand to up to six months.
For HR and business leaders, despite the news of massive layoffs at some technology companies, it’s likely your organization will continue to have challenges with recruiting and retention in 2023. Organizations should continue to look for ways to improve their employees’ experience at work by maintaining or even strengthening many of the pandemic-era programs that were enacted in the last three years. Embracing flexibility in how, where, and when work gets done, investing in holistic employee well-being initiatives, and re-imagining diversity and inclusion practices to include more communities like neurodiverse individuals, people with physical disabilities, and even formerly incarcerated individuals can all bolster an organization’s employment brand and give them access to new sources of talent. Additionally, maintaining a focus on employee development, career planning, and supporting their short and long-term career goals are all going to be critical for employers’ talent strategies this year.
It has been a wild and interesting start to 2023, for the labor market geeks out there, and we will continue to follow these important developments throughout the year here at H3 HR Advisors and on the HR Happy Hour Media Network.
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