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The U.S. job market is gradually cooling but remains hot despite years of government campaigning to rein in the market, representing a favorable environment for many job seekers, economists say.
“It still comes down to greater employee leverage, better remote opportunities, an easier time to trade jobs for better ones, and significantly more job security,” said Julia Pollak, chief economist at ZipRecruiter.
“You’re in a fortunate position,” she added, referring to employees.
Federal and private employment data released Thursday support that idea.
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In May, layoffs fell slightly and employers hired more workers, according to the Job Openings and Labor Turnover Survey, released monthly by the U.S. Bureau of Labor Statistics.
Americans also quit their jobs in greater numbers, according to the JOLTS report. As most workers quit for a new job, the upswing suggests a recovery in workers’ confidence that they can find a new job, economists said.
Although job vacancies – a barometer of companies’ demand for workers – fell by about 500,000 in May, they remain well above pre-pandemic levels.
Overall, job openings and monthly layoffs are 40% and 15% higher, respectively, than before the Covid-19 pandemic, while monthly layoffs are 21% lower, indicating a “robust and resilient labor market,” Pollak said.
Furthermore, payroll processing company ADP said on Thursday that the number of private sector jobs rose by 497,000 in June – well above its estimate of 220,000. The US Department of Labor will release its monthly jobs report Friday morning, and the ADP data may indicate continued strength in the US job market.
Interest rate hikes and unrest at the banks have little effect
Workers gained unprecedented leverage as the U.S. economy largely reopened in early 2021. Workers began quitting in record numbers — in a trend that came to be known as the “great resignation” — and their wages rose at the fastest rate in decades.
The labor market has cooled somewhat as the Federal Reserve raised borrowing costs to contain inflation and banks cut lending earlier this year due to the turmoil. But it has continued to defy expectations upwards.
“It’s really baffling that despite all the monetary tightening, inflation and a banking crisis, there are still so many job openings,” said Aaron Terrazas, chief economist at careers site Glassdoor.
It is really mind boggling that there are still so many vacancies.
Aaron Terrazas
chief economist at Glassdoor
“Overall, the market is continuing a gradual slowdown,” he added.
However, it’s not good news for all employees; there are some weaknesses, economists said.
“It’s still the story of a two-track economy,” Terrazas said.
For example, the information sector (which includes technology and media companies) saw 6% more layoffs and 17% fewer layoffs from pre-pandemic levels in May, Pollak said, citing JOLTS data.
In general, job seekers can take comfort in ample hiring and their ability to quit for better jobs, but it may take longer to find a good match amid a gradual slowdown in the job market, Pollak said.
That might mean signing up for job alerts and making sure you apply right away, she said.
“It’s a numbers game and employees may have to play it smarter in the future,” Pollak added.
Despite the cooling down, the labor market is still favorable for workers
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