The past several months have been dominated by headlines of layoffs at high-profile companies, particularly in the technology industry.
But on Friday morning, the Bureau of Labor Statistics reported that the US added 517,000 jobs in January, while the unemployment rate fell to 3.4%, the lowest in five decades. In total, 5.7 million US workers are unemployed, the lowest number since 2000.
As University of Michigan economist Justin Wolfers noted in a tweet following the release of the jobs report Friday morning: “The real America is getting back to work.”
“The labor market is very strong,” Ellis Gould, senior economist at the left-leaning nonprofit Economic Policy Institute, said in an interview ahead of Friday’s report. “The unemployment rate is low, and there are still people who haven’t returned to the labor market since the pandemic, so we can hope that the labor force can grow. But we’ve had an incredible two-year recovery.”
Additional data this week showed the strength of the job market: The economy added more than 11 million jobs in December and the weekly number of first-time filers for unemployment benefits fell to 183,000 – a nine-month low.
Contrary to the claims made by some brand-name companies in Silicon Valley, the jobs benefit. A handful of tech companies have cut thousands of jobs in recent months, including Amazon, Google-parent Alphabet, Facebook-parent Meta, Salesforce, IBM, Intel, Microsoft, Salesforce, Twitter and others.
Layoffs are brutal life-changing events. But there is evidence that many of those who lose their jobs are able to secure new ones in a relatively short period of time.
A recent ZipRecruiter survey conducted in the last three months of 2022 found that more than half of recent hires found their job within a month of searching, and more than 4 in 5 workers found their job within three months.
Even in the hard-hit tech industry, bounce-backs are strong: ZipRecruiter found that of workers recently laid off from tech jobs, 37% found a new job within a month and 79% found a new job within three months.
Where are companies currently recruiting?
Among those bringing in new workers at the moment:
- Airlines and airlines including Alaska Airlines, American Airlines, Boeing, Delta Airlines, Southwest Airlines, and United Airlines
- Bloomberg LP, which is hiring 1,000 new workers
- Chipotle, which announced it is looking for 15,000 new workers
- General Motors told the Detroit Free Press that while it hasn’t been a “huge” recruiting year for the automaker, it’s continuing to find tech talent, especially in Silicon Valley.
- The US Postal Service is hiring 2,400 workers in California
The strength of Friday’s jobs report surprised most economists — even those who had dismissed the idea that the U.S. was on the brink of recession.
But at least one group foreshadowed an ongoing jobs boom. Consulting firm Robert Half announced this week that a survey of 2,000 hiring managers found 58% of new permanent roles were added in the first half of the year, up from 46% just six months ago.
In fact, technology (64%) and finance and accounting (62%) managers saw full-time staffing needs. The survey found that 72% of managers plan to hire more contract professionals in the first half of 2023, up from 45% six months ago.
“Hiring tends to pick up at the beginning of the year, as budgets are approved and teams look for additional support for business growth and customer retention initiatives,” said Paul McDonald, senior executive director at Robert Half, in a statement.
“As job openings and turnover remain high, employers must be prepared to — and negotiate — recruit and retain skilled talent.”
How did we get to this point?
Julia Pollock, chief economist at ZipRecruiter, says the economy is returning to a more “balanced” distribution of job growth after the pandemic led to large layoffs in leisure and hospitality, but there has been growth in sectors such as warehouse and delivery.
Health care will be at the forefront, she said, as the sector has added 70,000 to 80,000 new jobs each month since last June.
“The economy is returning to normal, where job growth is not just driven by the pandemic recovery but is shaped by long-term forces like demographics and technological change, which will also be more sustainable,” Pollock said in a recent interview.
Green jobs such as solar and wind technicians, boosted in part by President Joe Biden’s multibillion-dollar inflation-reduction legislation, are also likely to see big increases.
And in Sun Belt states like Texas and Florida, job growth will be faster than in other parts of the country, Pollock said. Georgia, Kentucky and Michigan are on track to land large electric battery factories that will produce the components that power electric vehicles.
Many economists believe that there is a “soft landing” scenario for the U.S. economy in which job losses are low while inflation is slowing and corporate earnings are very much in play. A key factor in that scenario, at least in the minds of economists, is wage and earnings growth. Friday’s report showed average hourly earnings for low-wage workers rose just 0.25%, the smallest increase since January 2021.
Slow wage growth is not good news for workers. Indeed, their inflation-adjusted “real” wage gains have been negative for most of the pandemic and post-pandemic periods because price growth has been so rapid.
But EPI’s Gold said workers are likely to see real earnings rise as inflation continues to ease.
“Hopefully they will catch some of the higher inflation that we’ve seen in the last year,” she said.