Don’t Miss The Big Picture Behind The Monthly Jobs Reports
The monthly jobs report from the BLS always generates eager anticipation and exhaustive analysis. Take the figures from March, for example, when employers added 215,000 jobs and the White House announced the longest streak of job gains on record. Commentators quickly described the labor market as “the best-case scenario” and “a Goldilocks scenario” for jobs seekers and the economy.
Compare those results to April, when payrolls increased by a lower than expected 160,000 and both the labor force participation and the employment-population ratio fell ever so slightly. The pundits responded with pronouncements of a “sluggish” report and an economy that was “losing momentum.”
This monthly cycle leads us to wonder, just how important are the latest jobs figures? The data fluctuates based on seasonal trends, economic factors, demographic changes, data collection methods… you name it. While recruiters can certainly use the latest jobs report to monitor hiring trends in their industry, maybe we should also be looking at the bigger picture in the labor market from a talent acquisition standpoint.
Where Is the Wage Growth?
The jobs reports have been lauded in recent months in part due to small increases in average hourly earnings for private sector workers. But recruiters should look beyond the current average of $25.53. That amount is an average of all the wages earned, calculated on an hourly basis, by everyone employed in the private sector. Fortune 500 CEOs skew the figure upwards, while superstore greeters have the opposite effect.
For many U.S. workers, wages have been stagnant for some time, failing to keep pace with productivity gains and costs of living. The Economic Policy Institute found this disconnect started around the mid-1970s. From that time through 2013, productivity in the U.S. increased by 64.9%, while hourly compensation only rose by 8%.
Looking at the last few decades alone, wages for unskilled and often hourly jobs have fallen further behind. The real value of the minimum wage in the U.S. has increased by 21% since 1990, but the cost of living during the same time period has increased by 67%. Back in 2011, a minimum wage worker could expect to earn $15,080 in a year, but actually needed at least $30,000 to pay their living costs and guarantee financial security.
So where are the recent gains in wages coming from? The answer for many employees is, not me. Increases in pay are not evenly distributed across all industries, and they’re certainly not equal among different types of workers. The Economic Policy Institute also found that the biggest wage gains have occurred among employees who already earn more than everyone else. Middle and low wage earners have only seen their income deviate within a few percentage points since 2000.
What does this mean for recruiters? The wages you offer, and the other benefits that go with them, are a huge selling point for most candidates. So recruiters trying to fill low wage jobs might attract better candidates simply by convincing managers to nudge their pay upwards by small amounts. And hiring managers dealing with candidates who are used to high incomes need to pay attention to changes in average compensation for their industry. Talent shortages have made competition for high skill workers fierce, and a slightly more attractive salary might just shift things in your favor.
Lost Jobs That Won’t Return
While wage growth has been meager, we’ve seen 14.4 million new jobs added to payrolls since the financial crisis. But that’s not to say every job that was lost has been restored. Many jobs that disappeared during the recession will never come back.
The Great Recession is generally accepted to have lasted from December 2007 through June 2009, and by February 2010 the BLS estimates the U.S. lost 8.8 million jobs. The biggest losses occurred in goods production, that is, construction and manufacturing, while service-oriented sectors like education and healthcare fared much better.
Recruiters in industries that lost jobs may need to focus more on training and career development than anything else, as unemployed workers need help getting into a new role. Plus, there is evidence some higher skill jobs are returning to traditionally lower skill sectors. Talent acquisition teams will need to help their businesses understand these new requirements, and source candidates that have them.
New Jobs That Are Growing
So those 14.4 million new jobs did not simply replace the ones that were lost. Significant gains have come from other service industries, such as food services, retail, and employment services. This includes sales reps and office clerks, food preparers and bartenders, and cashiers at retail outlets. It’s hard to imagine many unemployed construction workers finding work again in these roles.
Looking back through March 2015, significant employment gains have come from health care and social assistance, professional and business services, leisure and hospitality, and retail trade. Even construction, hit hard by the financial crisis, has begun adding jobs, fueled perhaps by a stronger real estate market.
Recruiters filling the variety of service, tech, and sales jobs that have become more prevalent need to focus on the competition for quality candidates. A tighter labor market and a skills shortage mean the development of necessary skills among Millennial workers, and the retraining of older workers who want to get into these fields, will become more important for employers who want to stay ahead.
Candidates are consumers, and providing them with a consumer-quality experience will go a long way when few others are. Read our new eBook, “The Talent Acquisition Leader’s Guide to the New Candidate Journey” to learn more about this topic and what to do about it.