The Jobs Report: 3 Things to Take from October’s Data
The monthly jobs report has become a fixture in the post-recession media. Updates on unemployment rates, wage gains, and labor force participation flood news feeds as the Bureau of Labor Statistics (BLS) releases new data. But with new information to process each month, what should recruiters actually focus on?
The BLS collects labor market data ranging from unemployment demographics and part time employment to average hourly earnings and payroll increases in each sector. Some months see big gains or losses, but periods of stagnation also occur. Seasonal trends, economic conditions, availability of credit, consumer sentiment–the factors that can impact the jobs report seem endless.
Some of the data is more useful in talent acquisition, depending on your strategy. Unemployment rates and labor force participation can demonstrate tightness or slack in the workforce. Wages and industry trends are informative for certain types of companies. Every month in this post we’ll take apart the latest BLS figures, highlighting the important data and trends recruiters need to know.
1. Unemployment Rate
In October 2015, the U.S. unemployment rate dropped to 5%, continuing a downward trend and hitting its lowest point in over seven years. Unemployment rose as high as 10% during the recession, and the public understandably became concerned with that single figure.
The BLS calculates unemployment as “the ratio of unemployed to the civilian labor force.” Their data only includes unemployed adults who have actively searched for a job in the last four weeks. So many passive job seekers–unemployed people who have stopped applying for jobs–are not counted.
For recruiters, it’s important to understand how unemployment is calculated, and to know that figure is not the most accurate representation of the number of Americans who don’t have a job. If 5% of the U.S. is unemployed, that equals roughly 7.9 million people. But as we’ve learned, there are actually over 102 million adults in the U.S. who are not employed right now. So recruiters need to view the unemployment rate alongside other data, which can explain the status of many more working-age adults.
2. Labor Force Participation
If the BLS data says there are 7.9 million unemployed Americans, and we know the hiring rate has been slowing down, there must be more people in the workforce and fewer workers available for open jobs. Unfortunately, it’s not quite that simple. The actual number of employed people in the U.S. stood at 149 million in October, or 59.3% of the population. This is what’s known as the employment-population ratio, and according to the BLS it has hardly changed in the last year.
An equally important figure is the labor force participation rate, which counts those in the civilian non-institutional population that are employed, or fall into the BLS calculation of unemployed. So the 149 million employed people plus their 7.9 million unemployed peers gives us a labor force participation rate of 62.4% (or 157 million). And just like the employment-population ratio, the U.S. labor force participation rate has hardly budged–it was 62.8% in October 2014 (seasonally adjusted).
3. Increasing Payrolls
So far, the data doesn’t sound as good as we hoped. But it’s not all bad news. The BLS also tracks total non-farm payroll, which is much more interesting than it sounds. This figure adds up all U.S. workers who are not private household employees, unpaid volunteers, farm employees, or the unincorporated self-employed. These workers account for nearly 80% of U.S. GDP, and in October employers added 271,000 to their ranks. When you look at the growth in non-farm jobs since the recession, the picture looks even better:
And even though the labor force participation rate looks like it’s stuck in a rut, there were some small gains in the labor force worth noting. Almost 4.4 million people counted among the labor force who weren’t there in September. And an additional 2.2 million were considered to be looking for work compared to the previous month. While the overall labor force participation rate looks stagnant at first, the change over time is more encouraging:
What the Numbers Mean for Recruiters
Overall the October jobs report left the public more upbeat than last month. Unemployment is down, payrolls are increasing, and wages are finally showing signs of life. Hourly earnings overall increased by 0.4% this month, and are up 2.5% compared to a year earlier. Recruiters may rely on competitive salaries as a tool more now than in years past as job seekers gain more bargaining power.
But attractive pay and benefits are just the tip of the iceberg for proactive talent acquisition leaders. As they advertise more and more open positions, recruiters will need a consumer-quality candidate experience that is user friendly, mobile-optimized, and socially connected. October saw increasing payrolls among companies in healthcare, retail, food services, professional and business services. Job seekers have come to expect a modern, consumer-quality candidate experience regardless of industry.
Be sure to check out this post next month, when we’ll review the latest BLS data from the perspective of retailers.
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.