Job Market Update: August — September 2023.
January 19th, 2024
SUMMARY / KEY TAKEAWAYS
- The job market is the constant process of change, due to major shifts in the world economy and technological progression.
- In this collection of recent, relevant news, we look at different new trends in jobs that show how companies, workers, and the economy all connect.
Introduction: News & Trends in the Job Market.
The job market is the constant process of change, due to major shifts in the world economy and technological progression. In this collection of recent, relevant news, we look at different new trends in jobs that show how companies, workers, and the economy all connect.
1. Retaining Top Talent: The Vital Offerings Employers Should Never Overlook.
The pandemic-induced phenomenon of The Great Resignation, characterized by unprecedented job switches and high resignations, has given way to a new phase termed The Big Stay. This evolution is marked by a shift in employee behavior as economic uncertainty and concerns about recession lead to a trend where workers are choosing to remain in their current jobs.
However, the concept of employee loyalty has been reshaped by the pandemic, leading HR professionals to recognize that even though job hopping might have reduced, loyalty now holds a different meaning. Despite a decline in job openings in the U.S. in recent months, employee quits have increased, suggesting that job satisfaction and the fulfillment of employee needs remain crucial.
Jon Greenawalt, senior vice president of customer transformation at performance management technology platform 15five, highlights the importance of companies continuing to meet employee expectations, even as the power dynamic shifts back to employers. The pandemic has elevated workers’ expectations, leading them to demand engagement, autonomy, role clarity, and investment from their employers.
The redefined work landscape underscores the significance of engaging employees and meeting their evolving needs. Greenawalt emphasizes the need for companies to value their employees and provide them with a sense of purpose, demonstrating that loyalty is a two-way street.
Research indicates that in the post-pandemic work environment, employees prioritize engagement, autonomy, role clarity, and investment. This shift also extends to younger generations of workers who emphasize role clarity, additional compensation for added tasks, and investments in their career growth. Despite the evolving job market, the focus for HR leaders remains on adapting to these changing employee expectations to foster a loyal and engaged workforce.
2. How Companies Battle to Retain Talent with Competitive Counteroffers.
Approximately 40% of employers have resorted to counteroffers to retain employees who have been tempted by higher wages offered by competing firms in the past year, according to a survey conducted by the Chartered Institute of Personnel and Development (CIPD). The survey, which covered 2,000 employers, indicated that a significant proportion of those who made counteroffers expected to do so again in order to keep workers from leaving.
Although the number of job vacancies in the UK remains high at over one million, concerns have arisen about rising salaries potentially prolonging inflation. The CIPD revealed that among UK employers who utilized counteroffers in the past year, 38% matched the salary offered by the new firm, while 40% went even further and provided higher wages.
Despite the ongoing challenges posed by job vacancies, companies anticipate a 5% increase in pay over the next 12 months. The CIPD conducts a quarterly survey examining the UK labour market, and this most recent report marks the first time the organization inquired about counteroffers made to staff, which precludes direct comparisons with previous data.
However, it is anticipated that the use of counteroffers will likely rise as companies seek to recruit new staff and retain existing employees. While the number of UK vacancies declined to 1,034,000 between April and June, the figure is still 232,000 higher than the pre-Covid period between January and March 2020.
As wage increases struggle to keep pace with inflation, which reflects the rate at which prices are rising, concerns are mounting about a potential wage-price spiral. The Bank of England and the government are both wary that demand for pay raises, along with wage deals to fill vacancies, could contribute to inflation.
As employees seek higher wages to offset rising costs, this could inadvertently fuel inflation. The CIPD suggests that rather than simply raising pay, employers could consider offering other incentives, such as flexible working, additional paid holiday, career development opportunities, or improved pension contributions, to retain their workforce.
The CIPD’s survey also noted that only one in five employers who made counteroffers had a formal policy explaining the circumstances under which such offers could be made, potentially leading to issues related to pay gaps, pay fairness, and overall reward strategies.
3. The Current Job Market Landscape as Job Seeker Numbers Rise.
Rudy Tomarchio, a 37-year-old resident of Miami, has been in a job search for the past three months, concerned that his savings will run out if he doesn’t secure a position soon. His search for a management-level role has been challenging, as the job market has become increasingly competitive due to hyper-specialization in many positions.
Despite the historically low U.S. unemployment rate, the job cuts of the previous year continue to impact the job market, leading to a reversal in the job applicant-to-role ratio. Currently, there are about two job applicants for every advertised role on average, a significant shift from the post-pandemic peak when there was around one applicant per role.
LinkedIn’s data reveals that job search intensity has increased by 35% year on year, indicating that job seekers are applying for more positions, thereby creating higher competition for each role. While the number of job openings remains historically high, companies are now taking longer to fill them compared to a year ago. Many are approaching hiring more cautiously due to uncertainties around the economy, resulting in a slowdown in recruitment.
The employment landscape is changing, with a larger share of job openings now found in education and health services compared to a year ago when business and professional services roles dominated the market. Despite the challenges, economists see the gradual cooling of the labor market as a positive sign to mitigate inflation rates. However, for workers like Tomarchio, the slow job market brings urgency to secure a position before savings are depleted.
4. Why PayPal Deserves a Prime Spot in a Different Wallet.
After a six-month CEO search, PayPal has appointed Alex Chriss, formerly of Intuit, to take over from retiring CEO Dan Schulman. Despite being a trusted platform for consumers to manage their money, PayPal’s recent struggles have led to disappointing quarterly results and an 80% decline in its stock since a peak in July 2021. Chriss, known for his work at Intuit, particularly in small-business loans and acquisitions, is expected to bring fresh insights to PayPal.
This has sparked speculation about potential mergers or acquisitions, with companies like JPMorgan, Citigroup, and Meta Platforms being considered as potential suitors. However, concerns about regulatory hurdles and leadership transitions might hinder some of these options. One possible merger could be with Fiserv, a company that provides infrastructure similar to Visa and Mastercard.
This option would likely be more conservative and align well with PayPal’s financial technology focus. Such a partnership would allow PayPal to expand its fintech influence while offering valuable plumbing solutions.
While the leadership transition could be a challenge, the combination of PayPal and Fiserv could present an opportunity for growth. Despite the options on the table, Chriss will be under pressure to restore PayPal’s reputation and performance, potentially leading to strategic decisions to either revamp its operations or find a suitable partnership.
5. Smart Solutions: Using AI to Maintain Well-Stocked Store Shelve.
San Francisco-based startup Wisy is addressing supply chain challenges and product unavailability for retailers through its AI platform. With high employee turnover and supply chain disruptions due to the pandemic, retailers are facing difficulties in keeping shelves stocked, resulting in a product-unavailability rate increase from 5% to 15% over the past three years.
Wisy’s platform uses image recognition to track available products that need restocking, improving both customer experience and sustainability. It aims to reduce losses and enhance sales efficiency by quickly providing store employees with information about stock availability.
The platform was developed to address issues with manual product data collection processes, often hampered by unreliable internet connections and slow cloud providers. Wisy’s AI platform operates offline on mobile devices, allowing store associates to take pictures of products on display, with the AI recording information from the images.
The platform notifies store associates of shortages, prompts restocking, tracks product deliveries, and predicts inventory trends based on popularity. The platform was released with offline capabilities to ensure its reliability in various retail environments.
6. The Unresolved Challenge: ICT Workforce Shortage Persists Despite Growth.
The Netherlands is experiencing a significant shortage of ICT professionals, making it the tightest labor market for any profession. With around 552,000 ICT professionals across various sectors, including ICT companies, government, banking, and healthcare, the country’s increasing digitization and cybersecurity concerns have further heightened demand for IT experts, particularly software developers and security specialists.
The employment of ICT professionals has surged by 39% since the start of the pandemic, and the number of ICT workers on unemployment benefits has decreased sharply since 2018, though a recent slight increase can be attributed to economic cooling. This shortage of ICT professionals is a major challenge for employers, with over 44% viewing it as a hindrance to business growth.
The shortage of ICT professionals has prompted employers to refine their recruitment strategies. High demand for highly educated candidates with current ICT knowledge who are willing to work full-time has made recruitment challenging. A significant portion of ICT vacancies are specialized roles, leading to difficulties in finding suitable candidates, even among school-leavers.
Consequently, employers are adjusting their requirements more frequently and providing internal training to address the shortage. Looking ahead, it’s anticipated that over 60% of employed ICT professionals will require additional education or training by 2027 to stay abreast of technological advancements, particularly in improving analytical skills and adapting to AI-driven changes.
7. US Job Market Gains 187,000 New Roles in Recent Month.
The US job market has returned to a state resembling pre-pandemic conditions. In July, employers added 187,000 jobs, a figure slightly above the monthly average of the decade prior to the pandemic. While economists projected a net gain of 200,000 jobs, this report indicates that the labor market is gradually cooling down, aligned with the Federal Reserve’s efforts to control inflation.
Despite a recent downgrade of the US fiscal health by Fitch Rating, positive economic data continues to emerge, postponing or dispelling recession predictions. Industries experiencing significant job gains include health care, social assistance, financial activities, and wholesale trade. The leisure and hospitality industry, which had been hiring extensively to recover pandemic losses, saw more modest gains, suggesting a possible cooling in discretionary spending.
The report also indicated that although job openings are abundant, people are taking longer to find work, with the percentage of workers unemployed for over three and a half months rising. However, finding suitable workers and filling vacancies may be influenced by factors such as skills, geography, and inflation. The steady growth in the US job market indicates that the labor market is entering a stable state, with monthly employment gains anticipated to fluctuate within a range of 150,000 to 180,000.
This consistent growth is supported by the tight labor market driving wage increases and subsequent consumer spending, creating demand for more workers. While this stabilization is promising, some economists believe that further deterioration in the labor market is necessary to bring inflation down to the Federal Reserve’s target of 2%.
8. The 7-Week Job Search Journey from Application to Onboarding Revealed by LinkedIn.
Job seekers in the US are experiencing longer hiring cycles, with an average of seven weeks from submitting an application to starting a new job, according to LinkedIn’s research. For entry-level roles, the average hiring cycle is about six weeks, while more senior positions have an average of seven weeks.
Consulting has the longest hiring time, around 63 days, due to its rigorous screening process involving group and case interviews. In contrast, marketing has the fastest hiring timeline at about 49 days, as it involves less specialized roles with a larger pool of qualified candidates. Hiring has slowed from the rapid pace seen in previous years, but the situation isn’t entirely negative for job seekers.
Despite companies posting fewer jobs and the Federal Reserve’s interest rate hikes affecting hiring, the rate of layoffs and job cuts is similar to a year ago, indicating that employers are not aggressively cutting back staff. However, hiring in tech and media sectors, even after layoffs and hiring freezes, is still taking longer to fill.
The uncertainty about when and if hiring will pick up in the US remains, with economists suggesting that business leaders need to feel more confident in the economy before they significantly invest in hiring. While job seekers currently have more negotiating power than a few years ago, the phenomenon of the “great resignation” is diminishing, and the hiring landscape is evolving as the market adjusts to new conditions.
9. Empowering Tomorrow’s Workforce: Biden Unveils Paid Green Jobs Training for 20,000 Youth.
The White House has introduced the American Climate Corps, a program aiming to train 20,000 young individuals for jobs focused on climate and clean energy initiatives, including land restoration and forest management. The initiative seeks to provide access to skills-based training necessary for lucrative careers in the clean energy sector.
Moreover, the program intends to serve as a direct pathway for participants to secure employment in green industries. This action builds upon President Biden’s prior proposal for a $30 billion Civilian Climate Corps, designed to engage over 300,000 members in climate-related roles.
Although the CCC was not included in the Inflation Reduction Act of 2022, individual states have initiated their own programs, and now, the executive action of launching the American Climate Corps does not necessitate congressional approval. In response to the absence of the Civilian Climate Corps in the recent legislation, 51 members of Congress have urged President Biden to issue an Executive Order for its revival.
They emphasize the significance of preparing a workforce for well-paying, dignified, unionized jobs, aligning with the vision of a robust green economy. This move highlights the administration’s commitment to cultivating a skilled workforce in line with climate and clean energy goals.
10. 85-Year-Old Hull Widower’s Return to Full-Time Work Sparks ‘Magic.’
After retiring in 2017, 85-year-old Trevor Bottomley, from Hull, decided to return to full-time work, deeming it a transformative experience akin to “magic”. Following the passing of his wife Maureen, he felt a profound sense of loneliness and unhappiness.
His decision to rejoin EYG Home Improvements, where he was offered a sales position, brought newfound purpose and contentment. Mr. Bottomley, now working five days a week, expressed feeling rejuvenated, akin to being “30 years old again”. He intends to continue working well beyond his 90s, emphasizing that age is merely a number, while it’s one’s internal vitality that truly matters.
For Mr. Bottomley, the routine and social interactions provided by work have been instrumental in enhancing his overall well-being. He cherishes the opportunity to meet people and relishes in the sense of anticipation each day brings.
His story challenges ageism in the workplace, highlighting that older individuals possess invaluable skills and expertise. Lisa Baxter, the marketing manager at EYG, lauds Mr. Bottomley’s unparalleled knowledge and vitality, considering him a true legend in his field.
11. Equal Wages, Equal Work: Autoworkers Challenge Pay Disparities.
The United Auto Workers (UAW) is embarking on a strike with one of their primary objectives being the elimination of “tiered” compensation systems at major car manufacturers like General Motors, Ford, and Stellantis. This practice leads to varying wage and benefit structures among employees performing similar roles.
Under the previous UAW contracts, it could take up to eight years for a new hire to reach the pay level of a veteran worker. The strike follows a notable victory at UPS, where a similar tiered payment system was eradicated, suggesting that the UAW’s efforts could potentially catalyze change in other sectors.
The issue of tiered compensation has been a longstanding point of contention, with critics arguing that it creates a disparity in responsibilities and rewards among workers. The automakers assert that flexibility in labor costs is crucial for remaining competitive, especially amidst the shift towards electric vehicles.
They contend that offering varying pay structures serves as an incentive for employees to demonstrate commitment over time. Nevertheless, experts anticipate that the push against tiered pay systems will resonate beyond the automotive industry, potentially prompting similar demands in various sectors.
12. What Experts Say About the Federal Reserve’s Interest Rate Decision.
The Federal Reserve has maintained interest rates but adopted a more hawkish stance, projecting a further rate increase by the end of the year. The median outlook of Fed policymakers indicates that the central bank’s benchmark interest rate will peak this year in the 5.50%-5.75% range.
However, the updated projections reveal a more conservative monetary policy through 2024 than previously anticipated. While the 2023 outlook remains unchanged, the median projection for 2024 has increased by 50 basis points, suggesting a more prolonged period of higher interest rates.
This decision was unanimous, indicating a consensus within the Fed to sustain the current rate for an extended period. The robustness of the economy, which is surpassing earlier Fed expectations, is a key factor influencing this choice. This move signifies a shift towards a neutral stance in balancing inflation against employment.
The Fed aims for a soft landing, as evidenced by the upward revision of GDP from 1.1% to 1.5%. However, uncertainties linger, and the data-driven nature of future policy adjustments is emphasized.
13. Behind Job Transitions: 5 Personal Tales of Career Moves and Reluctance to Relocate.
The percentage of US workers relocating for new jobs has hit a historic low, with only 1.6% of job seekers relocating for their new roles in Q1 2023. This decline is part of a long-term trend, as data shows a steady drop from roughly 29% in 1986-1997 to the current low. Several factors contribute to this trend, including high housing costs, job concentration in specific metro areas, and the rise of remote work, allowing some workers to switch jobs without moving.
Demographic shifts like an aging population and the prevalence of dual-income households also play a role, as older individuals and dual-income couples are less likely to relocate. High moving expenses, lifestyle adjustments like owning a car in car-dependent areas, and the need to give up preferred lifestyles can be deterrents for individuals considering relocation for a job.
Additionally, high housing costs in destination cities can offset the attractiveness of a good job offer. The emotional aspect of leaving behind established social networks, friends, and family is another significant factor in the decision-making process. This indicates that while job opportunities are crucial, various personal, financial, and emotional considerations contribute to the choice of relocating or not for a new role.
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14. Expert Advice for Navigating the Competitive Tech Job Market and Securing Your Dream Role.
The tech industry has seen a surge in layoffs, prompting an influx of individuals seeking assistance with resumes and LinkedIn profiles. These stories shed light on the harsh reality many are facing.
For instance, Amy, a sales representative, experienced an abrupt layoff during a video conference, leaving her and 500 colleagues stunned. Similarly, Jason, with a 17-year career in IT, was caught off guard by a sudden layoff, only to find fierce competition in the job market.
In this challenging job landscape, standing out is crucial. Practical advice for tech job seekers emphasizes the importance of strategic planning and self-assessment before diving into the job search. Researching job openings to identify common skill sets and incorporating relevant keywords strategically into resumes is recommended.
Furthermore, emphasizing achievements and quantifiable results can significantly enhance a candidate’s profile. Finally, leveraging personal connections for referrals within the industry is highlighted as a powerful tool in the job hunt.
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15. Decoding the 2023 Job Market: What’s in Store for Job Seekers and Professionals.
The job market in the United States is experiencing a slowdown after a vigorous recovery earlier in the year. LinkedIn’s State of the Labor Market report reveals a 3.6% decrease in hiring in August compared to July, marking the third consecutive month of decline.
Year-over-year, hiring is down by 23.8%. Different sectors face unique challenges, with wholesale, retail, food services, and finance seeing notable declines in employment. The data reflects evolving consumer behavior and complex market dynamics.
Looking ahead to Q4, employers are approaching hiring with caution, focusing on critical skills for growth. The information technology sector is set to lead in employment, with 39% of companies planning to hire in this field. Soft skills like communication, collaboration, reliability, and problem-solving are highly valued by hiring managers.
Job seekers are advised to update their resumes and LinkedIn profiles, clean up their online presence, and strategize their search. Utilizing the holiday season as an opportunity to network and seek recommendations can be advantageous, as competition tends to decrease during this period.
For those aiming to advance within their current organization, seeking feedback and proactively communicating goals and achievements is crucial for a positive year-end review.
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Please cite as:
Ontology of Value (January 19th, 2024). Job Market Update: August — September 2023. Retrieved from: https://ontologyofvalue.com/job-market-update-august-september-2023/
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