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After a September jobs report marred by the impact of Hurricanes Harvey and Irma, October’s monthly data from the Bureau of Labor Statistics shows the US labor market rapidly rebounding from these disasters, with non-farm employment rising by a seasonally adjusted 261,000 last month. Although this did not meet economists’ expectations of 315,000 new jobs, it was a huge improvement from September. Figures for that month were also revised upward from 33,000 jobs lost to 18,000 jobs gained, meaning the US remains on a record 85-month job growth streak.
Unemployment fell to 4.1 percent, its lowest level since December 2000, but wage growth was stagnant at 2.4 percent year-over-year, a slowdown over the previous month. “With the swings from the hurricanes now largely behind us, the longer-term challenge of wage growth returns to the foreground,” Jed Kolko, chief economist at Indeed, commented to the Wall Street Journal.
The labor force participation rate also fell by 0.4 percentage points in October, to 62.7 percent, which suggests that even as the economy approaches nominally full employment, there remain many Americans who are neither working nor looking for work. Accordingly, re-engaging those labor force dropouts could become an increasingly important strategy for US organizations that want to expand their workforces in the current labor market.
“The bigger picture here is that the labor market’s fine,” Brett Ryan, an economist at Deutsche Bank, explains to the New York Times. Fine, however, is not necessarily great, as the labor force participation and wage figures suggest:
Now that every company needs a digitally adept workforce, the race to attract, hire, and retain top talent in this field is as competitive as ever. Demand for tech talent was already outpacing supply, but the problem is getting worse as companies’ talent needs are converging. In our research at CEB, now Gartner, we found that 40 percent of all job postings by S&P 100 companies were for just 21 different roles, including many technical, digital, and data jobs. (CEB Recruiting Leadership Council members can read our full study on competing for critical talent with a market-driven sourcing strategy).
LinkedIn and Capgemini recently completed a study quantifying the severity of the digital talent gap and looking at where companies are missing the mark. They found that 70 percent of US companies say the digital talent gap is widening, while 29 percent of employees believe their skill set is currently redundant or will be soon and another 38 percent believe this will be the case for them in four to five years. These findings also highlight how much more companies need to be doing to train existing employees on the digital skills needed for success in the workplace of the future. Almost half of the employees surveyed were not satisfied with their organization’s current learning and development offerings, and 43 percent said they were willing to move to another company if they felt their digital skills were stagnating.
The data suggests that companies’ development priorities are misaligned with their own future talent needs. Our learning and development research has shown that companies are often too focused on short-term skills gaps when creating development programs. In this case, digital skills may be the long-term blind spot.
A tight labor market has put the squeeze on US employers of all shapes, sizes, and sectors, but retailers are having a particularly hard time attracting associates and managers for their brick-and-mortar stores. Observing that retail hiring for the holiday season has been notably slower to start up this year, Reuters explores the causes of the retail sector’s talent crunch:
Sector observers have attributed this to brick-and-mortar retailers’ retreat under pressure from online players including Amazon, and firms themselves say they have simply taken a staggered approach to hiring this year that fills gaps slowly. Macy’s said holiday hiring was “off to a great start”. But staffing companies that hire employees for the industry say the problem is deeper and is putting pressure both on the quality of staff retailers can hire and, sooner or later, wages that potential candidates will demand. …
“Where we have a problem hiring is the lower level, the seasonal or entry-level employees,” said Melissa Hassett, vice president of client delivery for ManpowerGroup Solutions. Her clients include Lowe’s Cos Inc, Staples and auto parts firm Pep Boys and she says employees are seeking more flexibility with their schedules, training and pay, which is competitive with other entry-level jobs.
The competition from e-commerce has been visible in this year’s early holiday hiring numbers, where warehouse and fulfillment roles are making up a substantially larger share of the seasonal workforce. UPS and FedEx, for instance, are adding 95,000 and 50,000 staff, respectively, for the holidays, while Amazon and other e-commerce companies have ramped up hiring. Anticipating the need for these workers, some companies began recruiting them all the way back in the spring.
In another sign of the US labor market’s robustness, the number of Americans filing new unemployment claims fell last week to its lowest level in over 44 years, Reuters reported on Thursday:
Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said. … Claims are declining as the impact of Hurricanes Harvey and Irma washes out of the data. The hurricanes, which lashed Texas, Florida and the Virgin Islands, boosted claims to an almost three-year high of 298,000 at the start of September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department was estimating claims for the islands.
The week’s massive decrease in claims was likely inflated by the Columbus Day holiday, but other data in the Labor Department’s report also indicate a very healthy labor market: The number of people still receiving benefits after an initial week of aid fell 16,000 to 1.89 million in the week ended October 7, which was the lowest level since December 1973, and the four-week moving average of continuing claims fell 22,750 to 1.91 million, the lowest since January 1974.
Reuters also highlighted a report from the Federal Reserve Bank of Philadelphia indicating strong employment in the manufacturing sector in the mid-Atlantic region this month, with the bank’s measure of factory employment rising 24 points to a record high of 30.6. That report’s average workweek index also increased, while no firms reported decreases in unemployment in October.
In its 2017 Young Workers Index, PwC surveyed the economies of the 35 OECD member countries, creating an indexed ranking of the countries’ expected productivity from younger workers. Switzerland, Iceland, and Germany, were the top three, while the US finished 12th and the UK landed in 18th: both moved up two spots from last year’s rankings.
Germany’s result is probably the most impressive given that it also has the fourth-highest GDP in the world. The US has the world’s largest GDP while the UK is fifth in the measure of economic productivity. France, which stands sixth in GDP, was ranked 29th in the Young Workers Index while Canada, with the world’s 10th-largest GDP, was ranked sixth.
The study also looked into the effects automation will have on job prospects for workers in this age cohort. It found that 39 percent of jobs for US workers aged 15-24 are at risk of being lost to automation, compared to 24 percent in Japan, 28 percent in the UK, and 38 percent in Germany.
One of the metrics tracked in the Young Workers Index, the NEET (not in education, employment or training) rate, is identified as a key metric for overcoming the risks of automation and driving growth. The study claims that if all 35 of the OECD countries lowered their NEET to that of Germany (9.3 percent), it would lead to $1.2 trillion in GDP growth. For the United States, it predicts a $428 billion, or 2.2 percent, rise in GDP by lowering NEET from 15.8 percent down to Germany’s level.
The annual Freelancing in America survey, released this week by Upwork and the Freelancers Union, paints a picture of a freelance workforce that is growing much faster than the US workforce in general. The report estimates the total number of US freelancers today at 57.3 million, or 36 percent of the total American workforce. That number has grown more than three times faster than the overall workforce in the past three years, and if this rate of change holds, freelancers are projected to compose a majority of the US workforce by 2027. Millennials are leading the trend in this direction, with 47 percent of millennial workers saying they freelanced.
The survey of over 6,000 US adults also finds that freelancers are doing better than their traditionally employed peers at preparing themselves for their professional futures: 55 percent of freelancers said they had engaged in some kind of re-skilling activity in the past six months, compared to 30 percent of regular workers. In general, 65 percent of freelancers said they were updating their skills as work evolved, while just 45 percent of others said so.
Freelancers are also feeling the impact of technological change more acutely, with 49 percent saying their work had already been affected by AI and robotics, against just 18 percent of full-time employees. At the same time, technology is also bringing them more work, with 71 percent saying the amount of work they had found online had increased in the past year.
Another interesting finding is that while many people lump freelancers in with the gig economy, freelancers don’t: Only 10 percent of freelancers in the survey said they considered themselves a part of that economy. Indeed, we’ve seen from other research that the gig economy, properly speaking—meaning workers who make a living through platforms like Uber—is just one component of the new trend toward contingent and temporary employment in the US labor market. Fast Company’s Ruth Reader considers why freelancers might be rejecting the “gig economy” label:
Since Walmart began a push to raise wages for its legion of store employees last year, leaders at the big box chain have attributed its solid performance to the greater investment they were making in their staff. And because Walmart is such an enormous actor in the US economy, its choices have ripple effects in the retail sector. Over at Quartz, Oliver Staley argues that while some see the company’s size as being a “malign force,” that doesn’t take into account how Walmart’s choices can be also be beneficial:
The company also has used its massive buying power to eliminate waste in packaged goods and to drive down the cost of energy-efficient light bulbs, speeding their widespread adoption. Raising wages can have an even bigger impact. Walmart employs one in 10 US retail workers, and one out of every 100 US private-sector employees. Just as the company forced competitors to hold the line on wages, increasing its pay is now pressuring rivals to match it.
Walmart also raised salaries for entry-level managers in response to the Obama administration’s now-defunct overtime rule last year, but at the bottom of the pay scale, seemingly small increases, say from $10 to $11 an hour, can make a big difference in the lives of the working poor. Walmart is such a huge employer, Staley points out, that its pay practices effectively set a benchmark for the rest of the retail industry, pressuring other retail giants like Target to commit to adopting a $15 minimum wage by 2020: