New Paragraph
The Post-Pandemic Job Market Is Cooling Off
September 11, 2024
The first few years of this decade have been turbulent for the American job market. In the spring of 2020, the COVID-19 pandemic affected the entire world, and life and work for many Americans changed immediately. Businesses altered their current course, workers went remote or held the frontline (depending on the industry), and many storefronts shuttered their windows temporarily or for good. This movement affected the job market, and the aftermath still affects where we are as we head into the end of 2024 and prepare for the back half of the decade. Here are signs the job market may be slowing and some tips for how small business owners can respond.
Where The Job Market Was
The volatility of the U.S. labor market during the pandemic was historically significant. The
U.S. Bureau of Labor Statistics monthly surveys showed a decrease in employment of 13.6 percent between March and April 2020. This decrease represented 20.5 million jobs and was the most consequential one-month drop since the Bureau started monthly surveys in 1939.
However, just weeks later, the survey showed an employment gain of 3.4 percent from May to June 2020, the most substantial one-month increase since 1939. This jolt in hiring and change in the job market led to what experts call "boom times," or times of rapid economic expansion. Wages skyrocketed as employers fought for employees during a nationwide labor shortage. Unions found opportunities to negotiate significant gains in benefits and pay. Many companies went on a hiring spree while eager employees job-hopped in the hot market, looking for increased wages and better benefits.
Where The Job Market Is Currently
The
unemployment rate in June 2024 rose to 4.1%. While this number is still historically low, it is the first time it has crossed above 4% since 2021. Early in 2023, by comparison, it was at 3.4%.
Wage growth has also fallen and is now around 3.9% year-over-year for June. It's important to note that wage growth was around 3% in the months before the pandemic began. That said, many workers got used to being able to job-hop and drastically change their wages or negotiate higher salaries. The market is swinging back in favor of employers as wage growth cools off.
Economists Divided Over Forecast
Many economists feel that the job market has reached an equilibrium again. Other economists, however, fear that a cooling period could go too far and worsen conditions. The American economy still adds many jobs and has experienced employment growth for the past 42 months. What is important to note is that this hiring is taking place in a handful of sectors: healthcare, construction, and government work. Economists speculate that this growth, paired with the cooling period of white-collar hiring, can balance out the economy.
Worker Trends Of The Past Decade
Economists dubbed the rapid movement of workers hopping from job to job over the last few years "The Great Resignation." Employees knew that with labor shortages, they had the leverage to get higher wages and benefits, so company loyalty decreased. Another key component of the era was "quiet quitting," which refers to only doing the bare minimum of your required job description and not working after hours. Over several months, some took "quiet quitting" to the next level, not performing their job duties when working remotely and resigning suddenly and immediately. As for now, workers seem to be staying put, which some call (tongue-in-cheek) "The Big Stay."
College Graduates Still Struggling
College graduates, as usual, need help in the current job market. Experts have noted that it is a great time to have and stay at a job, but breaking into the market proves difficult. Many entry-level white-collar positions are hard to come by. A spring survey by the National Association of Colleges and Employers found that many companies planned to hire 6% fewer new graduates than last year (of 226 employers surveyed). And new data from payroll provider ADP shows that hiring for roles that typically require a bachelor's degree has dipped below 2019 rates.
What Small Business Owners Should Watch For
Whether or not the "Big Stay" is here to stay, small business owners can respond to these job market changes by keeping current employees engaged and staying cautious when hiring new talent. If there's one lesson we can learn from big tech companies' (i.e., LinkedIn and Google) layoff spree last year, it's that bloating your organization with new hires can be detrimental in the long run.
Small business owners can take a pragmatic approach by looking at their operations and deciding if new hires are necessary. Just as important, small business owners and managers should check in with their current staff and ensure they are engaged and happy in their workplace. We should always be looking to improve the talent level of our employees. For small business owners, opportunities to refine their talent base are improving and becoming more frequent.
Connect With The Alexander Group
A small business owner needs a group of individuals with similar goals. Our group of Greater St. Louis area business owners collaborates, discusses everyday issues, and develops dynamic solutions. When business owners pair this with our one-on-one coaching, they set themselves up for success.
Contact us today if you're a business owner ready to commit to improvement!
Are You Ready?
Are you ready to dissolve your barriers & commit to executing and achieving your vision?
Request to qualify for a one-on-one business diagnostic.
We'll take an assessment of your current circumstances, and take you to meet our advisory boards.
What are you waiting for? Contact us today!
