Actalent’s Economy and Labor Market Brief: July 2021
A quick rundown of key indicators and why they matter
Actalent's research and analytics team recently shared their July 2021 Jobs Report, which synthesizes information from a variety of sources including the United States Bureau of Labor Statistics survey results, media reports, industry intelligence, company earnings reports and external labor market data. The full set of data is included as a companion to this article.Top Takeaway's from July's Report:
- Hiring continued its upward trajectory in July, but so did separations
- Modest improvement in the labor force participation rate, but the talent drought is real in engineering and sciences
- With plenty of jobs and far fewer people to fill them, it's very much an employee's market
We'll begin with a quick overview of national, “big-picture” data before drilling down into variations within the engineering and sciences industries, because as you'll see, the differences reveal important implications for businesses looking to meet demand, let alone grow.
So first, the big picture.
Overall Jobs, Labor Force Participation, and Unemployment Rates
- 943K jobs were gained in July, with the three-month average sitting at 832K jobs gained.
- At 61.7%, the labor participation rate is up slightly from June, but still well below pre-pandemic levels (for reference, labor participation rate was 63.3% in February 2020).
- July's overall unemployment rate was 5.4%, for four-year college degreed workers the rate was 3.1%. It's even lower for Actalent labor categories, which are provided below.
Variations on and Implications for Engineering and Sciences
- 3.86M workers quit their job for a better opportunity in June1. This represents a 7% increase over May and sits just shy of the 4M quits experienced in April. Also of note: these 3.86M job quits set a record for percentage of employees who separated from a company due to a job quit (69%) versus being laid off.*
- There are 0.4 unemployed workers available to fill current job openings in engineering and sciences categories when compared against unemployment rates in these same categories. Let that sink in.
- Engineering and sciences unemployment rates are significantly lower than the overall, national average:
- Software-Hardware-IT + Mathematics unemployment rate is at 2.0%
- Architecture + Engineering unemployment rate is at 3.0%
- Life, Physical, + Social Sciences unemployment rate is at 3.9%
- Even with low unemployment rates, demand for engineering and sciences workers continued to increase over the past month:
- Demand for Pharmacists has increased by 6%
- Demand for Construction Managers increased by 5%
- Demand for Quality Engineers increased by 4%
- Capital expenditures are higher than pre-pandemic levels and will only increase with the expected passage of a $1T infrastructure bill. This matters for businesses already struggling to catch up with backlogs and hiring needs in engineering and technology automation.
Given these realities, the question keeping many employers up at night is: How will we find new engineering and sciences talent, keep the talent we have, replace the talent we’ve lost, not to mention grow our company and continue to innovate throughout this shortage?
While COVID has been a contributor, it wasn't the cause of the shortage—this trajectory was set years ago. Which means we've been thinking about and organizing around this for a while now. Here's the good news: there are solutions companies can begin to implement today. Many, in fact, are well within reach.
- Companies must make it easy for candidates to consider them. Many companies are evaluating pay scales to ensure competitive rates, they're getting creative with incentives and benefits, and many are finding ways to accelerate the interview process so they can act quickly. Companies know these measures are no guarantee an offer will be accepted, but without them, they won't get candidates to consider them as a possibility.
- Companies must work hard to keep and engage the employees they have. Employees are investments that appreciate with time, particularly in a market where replacing them is not an easy option. Recently, Actalent conducted a survey of more than 2,000 engineers to identify the factors that increased their engagement at work, resulting in increased productivity and retention. Among the factors: regular performance feedback, coaching, skill development, support in achieving career aspirations, and regular check-ins. When companies take the time to care for their employees, solicit feedback about what they need, and then act on what they learn, employees are more likely to stay and produce.
- Consider flexible work options for employees. Since summer 2019, hundreds of thousands of remote positions have opened in engineering and sciences. This is an area we're paying careful attention to as businesses emerge from the pandemic eager for growth and resurgence—but face a shortage of available talent. The data we're following indicate employees want flexible work policies, with up to 50% indicating they would leave or turn down a position that didn't offer flexibility. If this month's separation data are any indication, employees are making good on that requirement.
- Partner with a strategic services and talent solutions provider. Working with a services and talent solutions provider specialized in engineering and sciences is an option many businesses are taking advantage of in this competitive talent market. An experienced, strategic partner will understand a company's unique challenges, deliver customized solutions, and provide access to skilled, engaged, and productive talent.
1July separation data was not released at the time of this publication.
*It is possible these numbers will change based on government revisions.