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September 11, 2023
2 Min Read
Andrew Hetherington/The Image Bank via Getty Images
Recent headlines have proclaimed that the labor market is weakening. Here are a few examples:
“Job Market Shows Signs of Weakening…” (US News & World Report, 8/29)
“Weaker-Than-Expected August Job Growth Reported” (Forbes, 8/30)
“Today’s Jobs Report Shows the Labor Market Is Cooling” (Barron’s, 9/1)
Some of this can be attributed to wishful thinking, as the red-hot jobs market has been the bane of Federal Reserve Chairman Jay Powell’s existence for close to two years. Any signs that it’s cooling would be good news for those hoping for an end to higher interest rates. The problem with wishful thinking, though, is that it’s often wrong.
The UKG Workforce Institute recently surveyed more than 300 manufacturing HR leaders in the United States and published its findings in an Aug. 28 report. The survey found that 76% of manufacturers are still struggling to fill critical labor gaps.
Another headline you have probably seen a lot is that the unemployment rate rose in August. Words like “jumped,” “surprised,” and even “surged” were used by prominent news outlets. The reality is that the current 3.8% unemployment rate historically is quite low. The “surge” from July’s 3.5% was caused almost entirely by new people entering the workforce and not getting a job immediately.
The US Bureau of Labor Statistics reported that the number of job openings edged down to 8.8 million, only about 1.5 jobs per unemployed worker. Sure, that is down from more than 11 million at its peak, but 8.8 million is still historically high, double what it was 10 years ago, for example.
The bottom line is that the labor market has softened compared to the perfect storm we witnessed two years ago, thanks to 11 interest rate increases and some supply chain rebalancing, but it remains historically robust. The remainder of 2023, perhaps into early 2024, may be the best opportunity to add good workers to your company that you will see until the next down cycle, which could be a long time coming.
About the author
Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].
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