Actalent's Economy and Labor Market Brief: October 2021
October's job report was a mixed bag of good news, bad news, and more of the same. From cereal to semi-conductors to talent, scarcity continues to be a defining feature of the current economy and labor market.
"We feel that the supply chain constraints will continue to be in the market all the way to the second half of calendar year 2022 before we see them abating." —Tarek A. Robbiati of Hewlett-Packard Enterprise
If you're a new reader to our brief, welcome! Part I reviews the national landscape, Part II narrows the focus on the engineering and sciences spaces, and Part III connect the dots between the data and other patterns we're noticing in the world. Better information means better decisions.
Part I: The National Landscape
- For the first time in three months, the national labor report exceeded economists' expectations in job growth with more than 531K jobs added to the economy. August and September's numbers were revised upward, indicating the economy is strengthening.
- Overall unemployment dipped to 4.6% in October. Unemployment among degreed workers remains at 2.4%.
- A record-setting 4.4 million workers quit their jobs in September—2.8 percent of the workforce, which is up from the previous record of 4.3 million in August.
- For the 16th straight month, the labor force participation rate remained low (61.6% in October), meaning three million working-age people are neither working nor actively looking to work.
- The Consumer Price Index—the metric used to measure inflation—jumped to 6.2% in October. This 30+ year high more than wiped out the 4.9% year over year average hourly earnings workers experienced in October.
- Scarcity remains a defining feature of the current labor market as job openings continue to outpace the number of workers available to fill them (10.4 million openings in September).
Part II: The Engineering and Sciences Landscape
Unemployment rates in engineering and science fields continue to fall, even as job postings continue to rise.
- Software-Hardware-IT & Mathematics: 1.9%
- Architecture & Engineering: 2.1%
- Sciences—Life, Physical, and Social: 1.9%
Demand for several key positions continues an upward trend, with job postings showing significant increases between September and October:
- Pharmacy Technicians: 11%
- Phlebotomists: 10%
- Architectural + Civil Drafters: 9%
- Pharmacists: 8%
- Mechanical Engineers: 5%
- Chemists: 5%
Still, the availability of workers to fill these positions remains slim. The ratio of unemployed workers to job openings in Actalent's core labor categories dropped slightly between August and October: there are currently at 0.2 available workers to fill one position.
As an industry, Scientific Research & Development showed the greatest job growth of the labor categories we track. With 5.2K jobs added in October, this industry has seen a 7.9% increase year over year. Public and private investment in Scientific R&D, combined with digital, technological, and process advancements accelerated by COVID therapeutics, will expand into other areas, contributing to continued growth and innovation in this industry.
Part III: Connecting the Dots
As businesses continue to make important decisions amid low unemployment, record job openings, and low labor force participation, here are a few important factors to keep in mind.
- Incentives to change jobs have never been higher, and incentives to work in stressful Engineering and Sciences roles have never been lower.
There are several converging factors contributing to this phenomenon:
- Scarcity: the jobs are there, the workers are not. It's an employee's market.
- More money: the 2021 forecasted annual wage increase for workers is 3.4%. Compared to the 6.2% consumer price index inflation rate, that translates to a 2.8% pay cut.
- Burnout, balance, bank accounts: There is no single factor driving the Great Resignation—workers are burned out, engagement has dipped, priorities have reshuffled, bank accounts are thriving—but the bottom line is record numbers of workers are quitting. And according to Quantum Workplaces, who conducted surveys of more than 32K workers, engagement levels were at all-time highs during the pandemic (81% reported feeling highly engaged in January 2021) but fell to 74% six months later.
- Pay parity: Many Fortune 500 fast-food and retail companies are offering wages equal to or greater than those requiring college degrees and certifications.
- Flexibility: If COVID taught us anything, it's that productivity and engagement were not hindered for businesses able to stay 'open' when the world shut down. Post-pandemic, 50 percent of companies now offer flexible work arrangements and 43 percent of employees expect their employer to continue remote work. Seventeen percent of working professionals indicate they will 'probably to definitely' consider looking for a new job if they're required to return to the office full-time, and back-to-office orders are certain to hinder women's participation in the workforce.
- Businesses are finding creative ways to attract and retain workers.
A new labor market—with increasing opportunities to work from anywhere in several industries—requires a new approach to finding and keeping talent. Here are some of the things we're noticing:
- Re-onboarding existing employees: We know the benefits of onboarding for new employees—engagement, connectedness, increased productivity, retention. After the upheaval of the last year, businesses are realizing that onboarding doesn't only benefit new employees, it's a practice that benefits all of them. So, put your best offers on the table, talk to employees about expectations, provide feedback, reward them on a job well done, prioritize coaching and development programs. Find out what engages them, what gets them excited, what they're looking for in an employment experience. Don't wait for employees to tell you if they're happy, ask them.
- Revising the requirements of the job: Some industries are waiving educational requirements for candidates who demonstrate aptitude, strong work ethics, and trainability. With investments in upskilling, reskilling, diversity, equity, and inclusion programs, and pipeline planning occurring (or at least being considered) in most industries, and college with enrollment continuing to fall, it will be interesting to see if this practice sticks, and if it has broader application to other industries down the road.
- Alternative pay/benefits incentives: Several big-name employers have started making earned pay available daily, others are offering debt-free educations. In Canada, small businesses are introducing pay increases, more vacation days, and shorter work weeks.
- The Infrastructure Investment and Jobs Act has been signed into law. This will have a tremendous impact on businesses in engineering and sciences if the supply chain (of talent and goods) can keep up. Costing $1.2 trillion over eight years, with more than $550 billion in new spending, Actalent labor categories will be called upon: $110 billion toward roads, bridges, and other infrastructure fixups; $73 billion for the country's electric grid and power structures; $65 billion for broadband; $21 billion in environmental remediation; $7.5 billion in zero to low emission public transportation. Read more details. In the meantime, if businesses want to compete, they'll need talent that can hit the ground running, and with expertise in developing, applying, and implementing leading edge technology.
- With work becoming more and more complex
- Combined with the rapid pace at which skillsets are becoming outdated
- And considering the 0.3 available workers to fill every one open position in engineering and sciences...
...FTEs may no longer be the future for some industries. Flexible access to talent with proven expertise in specialized skillsets, just might be.
Actalent's October 2021 Jobs Report 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.
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: email@example.com