Unemployment Down, Workforce Participation Up: Competition for Talent Continues and Skills-based Hiring Gets Some Attention

Stemming inflation like trying to ‘land in an earthquake’

Actalent's Economy & Labor Market Brief: March 2022

If we had to summarize the state of March’s labor market in one sentence, it would sound like this: More people are returning to work, many continue to quit work (in search of better work), and everyone is finding work (quickly).

“Concerns about labor shortages seem to be more about employer competition than about Americans not working.”—Daniel Zhao, Glassdoor

If we had to summarize the state of March’s economy in one sentence, it would sound like this: Global instability and soaring oil prices combined with the continuing unmet demand for cars, homes, food, and the materials and people to make them, is driving up prices and wages, which is driving up inflation, which is contributing to concerns of an economic slowdown.

The challenge for the Federal Reserve is how to slow inflation without driving up unemployment.

“It’s like trying to land during an earthquake,” said Tara Sinclair, a professor of economics at George Washington University.

 

March At-a-Glance

Jobs Added 431K
Labor Force Participation Rate 62.4%
Unemployment 3.6%
Job Quits 4.4 million
Inflation Rate 8.5%
Avg Hourly Earnings 5.6%

 

Overall. The US labor market added another 431,000 jobs to the economy in March with notable gains in professional and business services and manufacturing. The labor force participation rate ticked closer toward pre-pandemic levels at 62.4 percent, with more than 324K women returning to the labor force in March—a potential sign of less disruptions to daycare and schools, signaling true recovery. The overall unemployment rate dropped from 3.8 percent in February to 3.6 percent in March.

Engineering and Sciences. Unemployment for engineering and sciences labor categories and industries (except for construction) remain below the national average. Currently, job openings were over 10X the number of unemployed workers.

 

Unemployment Average, Engineering and Sciences

  January 2022-
March 2022
Labor Category
Software-Hardware-IT & Mathematics 1.7%
Architecture + Engineering 1.9%
Sciences—Life, Physcial & Social 1.9%
Industry
Hospitals 1.6%
Utilities 3.0%
Professional and Technical Services 2.3%
Manufacturing 3.4%
Construction 6.9%

 

Inflation and wages.

If you’re a consumer of anything—gas, groceries, housing, clothing, streaming services—you know you’re paying a lot more for it. In fact, you paid an average of 8.5 percent more for it in March than you paid one year ago.

Some regions, like Phoenix, are experiencing even higher inflation rates. The Wall Street Journal recently conducted a comparison of inflation rates over a one-year period by region. Phoenix, for example, is experiencing a 10.6 percent increase in inflation. Baltimore, a 9.3 percent increase.

In addition to paying more, you might also be earning more. Year-over-year, average hourly earnings were up 5.6 percent in March. For many, pay is the starting point for negotiations. If employers can’t compete with pay, they’re not competing.

Connecting the Dots.

  • It’s often said that every company is now a tech company with the rapid acceleration of digital transformation during COVID. But one story shines a human-centric spotlight on just what this transformation looks like in practice.  The creators of Figure1, a knowledge-sharing platform for doctors that works like Instagram has been instrumental in giving real-time feedback and second opinions to medical professionals on the ground in Ukraine. CEO Josh Wildstein, "In most places in the world, the phone is the lifeline. Because [Figure1] is a simple-to-use native app, it's like having a global hospital in your pocket when resources are scarce, or knowledge is scarce.”
  • Skills-based hiring is getting a lot of attention as employers identify new ways to get work done without enough workers. The New York Times recently wrote an article on the topic, and The Burning Glass Institute just released a comprehensive report that breaks down the realities, the merits, and provides an analysis of how skill requirements change.

The ISM Manufacturing Index showed overall activity deceleration. New orders are down considerably, as is production and backlogs. The only thing up is sky high inflation—87.1 on the index. With new lockdowns in China and the war in Ukraine, experts are predicting even further strain on already strained supply chains. More companies are looking toward near-shoring and re-shoring initiatives to counter low supply of materials and worker challenges, including home builder PulteGroup. They plan to open an automated manufacturing facility in South Carolina by next year, adding to the demand for “automation engineer” and “manufacturing engineer” job titles, which have grown in demand by 20 and 28 percent respectively.

Past Issues:

Actalent's March 2022 Market Matters synthesizes information from a variety of sources including the United States Bureau of Labor Statistics survey results, 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.

Relevant Insights