What the Labor Market Has in Common with a Little Engine that Could

Actalent's Economy & Labor Market Brief: June 2022

Welcome to Actalent’s Economy and Labor Market June 2022 Report where we share insights into some of the most important conversations happening in the economy and labor market and help connect the dots about why it matters to you.

Listen to the Brief:

While experts predicted (and Feds hoped for) a slowdown in job growth for June, the labor market continues to motor up a steep mountain of record-setting inflation (9.1 percent in June), high energy costs, sharp interest rate increases, and wider-spreading recession chatter.

In June, 372,000 jobs were added to the economy as employers continue to compete for workers in a tight labor market and workers navigate tough economic conditions. Quit rates remain high (4.3 million), labor force participation inched lower (62.2 percent), and while isolated layoffs and discharges are attracting headlines, actual numbers are low (1.4 million).

Whether this "I think I can" economy will make it over the mountain is anyone's guess (and a lot of them conflict), but it's got labor market momentum behind it, at least for now.

A Closer Look at the Engineering and Sciences Landscape

The Feds are paying close attention to the unemployment rate since higher unemployment tends to bring down inflation.

But they aren't getting much help from the numbers in June.

  • For the fourth straight month, overall unemployment held steady at 3.6 percent
  • It’s even lower for degreed workers (2.1 percent)
  • And when we look at unemployment by industry, the trend is similar.

Industry

April-June Rolling Unemployment Avg

Hospitals

1.3%

Utilities

1.4%

Professional & technical services

2.0%

Manufacturing

3.0%

Construction

4.0%

For most industries employing engineering and sciences workers, the unemployment rate is well below national levels, with Hospitals coming in lowest at 1.3 percent unemployment, and Utilities not far behind at 1.4 percent. It's worth noting that the Utilities industry is looking to hire 45 percent more Engineering talent this summer compared to 2021—but with just .15 workers available to fill one open engineering position, the industry has their work cut out for them.

Construction is the only Actalent-relevant industry with an unemployment rate that’s higher than the national average (4.0 percent). Demand for these workers is up; it's just increasingly harder to find them. Companies are boosting wages, offering sign-on bonuses, and spearheading apprenticeship programs to lure these workers to their sites. Like the utilities industry, engineers are in high demand in construction, with nearly 600 more Construction Project Engineer postings in June 2022 versus one year ago.

Connecting the Dots

  1. One strategy not working for companies looking to attract new talent: drawn-out hiring processes. In a labor market with quit rates that have exceeded 4M for over a year, and engineering and sciences job openings that outpace available workers by 10x, a recent survey found that 25 percent of candidates lose interest in a potential job after two days; 60 percent lose interest after one week.
  2. Between the limited supply of skilled workers and the impending concerns of a recession, employers are depending more and more on contingent workforces—experienced talent with the specialized skillsets and know-how to complete critical work. It’s a win-win as workers enjoy the flexibility and variety that comes with this “consultant, gig-like approach” to work, and companies benefit from expert talent who can hit the ground running. The value these workers deliver isn’t going unnoticed as more and more companies turn to talent solutions providers to get important work done. However, as a recent article in Forbes points out, initiatives to engage and retain these workers is key to keeping them on your projects.
  3. Wages increased 5.1 percent year over year in June, which is still rare considering typical wage increases pre-pandemic ranged between 2 percent and 3.6 percent at their highest. Still, with surging costs of just about everything, 5.1 percent isn’t close to catching inflation. Still, some companies are considering mid-year raises to retain employees who still have plenty of options in this market.   
  4. Finally, the construction of new manufacturing facilities in the US has soared 116 percent over the past year as companies move to shorten supply chains. In January, UBS surveyed C-suite executives, 90 percent of whom said they were either in the process of moving production out of China or had plans to do so; 80 percent indicated plans to bring production back to the US. These aren’t the factories of old, however. Advancements in automation may mean a smaller group of workers in Industry 4.0, and increased opportunities for roles requiring degreed workers—analysts, technicians, and machine maintenance workers. Of course, how companies proceed may depend on the Feds ability to hold off a recession. Then, of course, there's the matter of finding the talent to pull it all off.

Past Issues:

References:
Actalent's June 2022 Economy and Labor Market Report synthesizes information from a variety of sources including the United States Bureau of Labor Statistics survey results, Lightcast (formerly Emsi-Burning Glass), 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.

If you'd like more information on the data presented, or have questions about the information provided in this report, please contact our team at: content@actalentservices.com.

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