Despite Uncertainty, US and UK Employers Plan to Hire in 2017

Despite Uncertainty, US and UK Employers Plan to Hire in 2017

Both June’s Brexit referendum and the surprise victory of Donald Trump in the US presidential election last month shocked markets and led to speculation about the respective economic trajectories of the UK and US. Both events also portend major changes in the legal and regulatory landscape and will have major impacts on employers, some of which remain unpredictable. Yet for all the uncertainty these countries face going into the new year, employers seem fairly bullish about the near future.

At the CIPD’s People Management blog, Marianne Calnan highlights a new survey showing that 41 percent of UK firms intend to expand in the coming year, “suggest[ing] some of the doubts around the country’s economic buoyancy may have been overstated”:

The employment trends survey from the Confederation of British Industry (CBI) and recruitment agency Pertemps found that businesses were planning to hire widely in 2017, though there were concerns about future access to migrant talent and a slight slowdown in some of the underlying hiring trends reported.

Although the pace of recruitment has slowed compared to last year’s survey, there remains a significant positive balance of companies (+28 per cent) expecting to add employees versus those expecting to shed jobs.

Uncertainty about the UK’s future relationship with the EU looms large, however, with 58 per cent of employers concerned about access to skilled migrants – compared to 31 per cent last year – and half worried about access to non-graduate migrant labour.

In the US, meanwhile, ManpowerGroup’s latest employment outlook survey finds that nearly one in five employers plans to add to their workforce in the first quarter of 2017:

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US Jobless Claims Fall to Lowest Level in Over 40 Years

US Jobless Claims Fall to Lowest Level in Over 40 Years

According to the US Labor Department, initial unemployment claims dropped by 19,000 to a seasonally adjusted 235,000 last week, the lowest figure since November 1973. Patricia Laya at Bloomberg looks into what these numbers mean:

The biggest drop in initial claims since June suggests employers are loath to fire workers as the economy continues its modest expansion and the number of experienced applicants available for hiring remains limited. Filings for unemployment benefits have stayed below 300,000 for 89 straight weeks — the longest streak since 1970 and a level typical for a healthy labor market.

“We’re exhausting the pool of workers that we can draw from out of the unemployed,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Mass. “We’re approaching full employment, so we’re seeing really strong job gains, but they can’t continue for very long.”

The Wall Street Journal’s Anna Louie Sussman has more:

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Does the Skills Gap Explain All These Job Vacancies?

Does the Skills Gap Explain All These Job Vacancies?

The skills gap—a systemic disconnect between the skills available in the workforce and those employers need—is commonly cited as a major reason why many jobs in the US are going unfilled. Now more than ever, organizations need talent in increasingly critical areas like digital technology and data science, the conventional wisdom holds, and US colleges and universities aren’t producing enough graduates with the right skill sets.

But not everyone buys that explanation, or the accompanying solution of introducing better on-the-job training and making sure higher education is aligned with the needs of the labor market. At the Pew Charitable Trusts’ Stateline blog, Sophie Quinton calls this solution “too simplistic”:

It’s true that over the past 30 years, education and skill requirements for jobs have been rising, as a Pew Research Center study recently found. … But that long-term shift doesn’t totally explain why jobs have been sitting open since the Great Recession ended. The U.S. hasn’t experienced the massive wage growth you’d expect from a shortage of workers, although wages did start rising last year. Many economists say that if there were a shortage of workers, wages would be going up more.

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Rising Quits Rate Suggests a More Confident US Workforce

Rising Quits Rate Suggests a More Confident US Workforce

The August Job Openings and Labor Turnover Summary, released by the Bureau of Labor Statistics on Wednesday, shows that nearly 3 million employees quit their jobs voluntarily that month. Economists see this as a sign of labor market strength, Andrew Soergel writes at US News and World Report, indicating that workers feel increasingly sure of getting a new job:

“Optimism continues to build over the near-term hiring outlook,” Sam Bullard, a senior economist and managing director at Wells Fargo Securities, wrote in a research note last month, noting that “labor market conditions have been supportive to the recent increase we have seen in confidence and consumer spending growth.”

Quits have been consistently high all year as the labor market continues its record-setting run of job creation. American employers generated 156,000 new jobs last month, according to a separate report the bureau released Friday, and have ginned up more than 1.6 million additions so far this year. And with more newly created positions and a consistently high number of job openings, domestic employees have plenty of options if they opt to leave their current positions in search of new ones. Job openings fell back slightly in August after coming just shy of an all-time high in July, but employers were still actively recruiting for more than 5.4 million vacancies.

Meanwhile, more than 5.2 million workers were hired in August – which makes it the third-best month for new hires so far this year. Professional and business services brought on more than 1 million new workers, while health care and social assistance outfits accounted for 542,000 additions.

The latest JOLTS data comes amid other encouraging indicators in the US labor market.

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What Does Declining Job Tenure Mean for the Labor Market?

What Does Declining Job Tenure Mean for the Labor Market?

The median number of years American workers have been with their current employer declined from 4.6 years in January 2014 to 4.2 years in January 2016, the US Bureau of Labor Statistics recently reported. The bureau cautioned against using this figure as an indicator of broader labor market trends:

Data on tenure have been used as a gauge of employment security, with some observers regarding increases in tenure as a sign of improving security and decreasing tenure as a sign of deteriorating security. However, there are limitations to using the data in this way. For example, during recessions or other periods of declining job security, median tenure and the proportion of workers with long tenure could rise if less-senior workers are more likely to lose their jobs than are workers with longer tenure. During periods of economic growth, median tenure and the proportion of workers with long tenure could fall if more job opportunities are available for new entrants to the workforce and experienced workers have more opportunities to change employers and take better jobs. Tenure also could rise under improving economic conditions, however, as fewer layoffs occur and good job matches develop between workers and employers.

A changing age distribution among workers would also affect median tenure. Since older workers are more likely to have long tenure with their current employer than younger workers, aging baby boomers in the workforce would provide upward pressure on overall median tenure.

“Still,” Ben Leubsdorf wrote in the Wall Street Journal, “there’s a strong case that the latest decline is good news about the economy”:

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‘Solid’ US Jobs Numbers in September

‘Solid’ US Jobs Numbers in September

The US economy added 156,000 jobs in September, a decrease from 167,000 the previous month, the Bureau of Labor Statistics announced on Friday. The unemployment rate rose ever so slightly from 4.9 to 5 percent, and average hourly earnings rose six cents to $25.79, making for 2.6 percent wage growth over the past year. Speaking to the New York Times, Diane Swonk, an economist in Chicago, calls the report “solid, not spectacular”:

“The good news is that participation went up, even though the unemployment rate did, too. Regaining that ground is very important.”

Before the report, economists on Wall Street looked for the economy to add 172,000 jobs in September. Revisions for July and August showed that 7,000 fewer jobs were created in those months than the Labor Department first estimated. In the wake of these figures, the Federal Reserve is still expected to raise interest rates late this year, and there was little in the report to suggest that the job gains might lead to inflation.

“There are still plenty of unemployed people out there, enough for employers to continue to hire at a substantial pace,” said Michael Gapen, chief United States economist at Barclays. “The expansion will end before you run out of labor,” added Mr. Gapen, who estimates that the unemployment rate could drop to 4 percent by the end of 2017.

The marginal uptick in the unemployment rate could actually be a positive indicator, reflecting growth in the labor force as people who had dropped out of it entirely start looking for work again, the Wall Street Journal observes:

The labor force—the number of adults who hold jobs or are actively looking for them—grew by 444,000 last month and by slightly more than 3 million over the past year. The labor-force participation rate—the share of the overall population in the labor force—stood at 62.9% in September, up a tenth of a percentage point from August and a half-point from a year earlier. It is still hovering near the lowest level since the late 1970s, in part due to the retirement of baby boomers but also because many working-age Americans have given up the job search.

Even with the latest progress, millions of Americans are underemployed. The share of residents who are jobless, involuntarily stuck in part-time work or too discouraged to look for a job stood at 9.7% last month, unchanged from August, but down from 10% a year earlier.

Reuters deduces that the lackluster numbers may make the Fed more hesitant to raise interest rates too quickly:

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It’s a Great Time to Look for a Job—And a Tough Time to Look for an Employee

It’s a Great Time to Look for a Job—And a Tough Time to Look for an Employee

The US economy has been delivering a lot of good news for employees and job seekers lately: Last week, the Bureau of Labor Statistics reported that job openings had hit an all-time high in July with nearly 5.9 million vacancies, and today the Census Bureau reports that household family incomes rose 5.2 percent last year, the first significant increase in years and a sign that growth is finally benefitting low- and middle-income Americans again.

It’s become increasingly clear over the course of this year that today’s labor market is talent-driven, with employees calling the shots. Pointing to the job openings data released last week, Steve Boese observes that this tightening labor market means a challenging time for recruiters. The ratio of unemployed individuals to job openings stood at 1.3 in July—the lowest it’s ever been since the BLS began measuring it:

This data reminds us that it is both a great and terrible time to be in recruiting/talent acquisition. Let’s start with the terrible part. For lots of jobs and locations there simply are not enough (qualified for sure), candidates to form an adequate pipeline for the roles you need to fill. There are fewer unemployed persons overall, workforce participation rates remain really low by historical standards, (a subject to its own), and lots of people with desirable skills are coming to terms with their power and negotiating leverage in the market. When you have to pry someone away from the job they already have, that gives a little bit of power to the person that in worse economic times they would not enjoy.

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