Duck, Duck, Goose.

Welcome to the economy and labor market that feels like an endless game of circular tag with no clear winner.

Actalent's Economy & Labor Market Brief: October 2022

Listen to the Brief:

“While there are signs labor shortages have begun easing somewhat, hiring and retention difficulties are not over. A tight US labor market, understaffing, limited recovery in labor force participation, and an aging workforce all suggest US labor supply will remain a challenge for companies. As a result, employers may be more careful in laying off workers.”— Frank Steemers, senior economist at The Conference Board

You remember playing duck, duck, goose as a kid: Sitting cross-legged, waiting patiently (or impatiently), hoping (or worrying) that you'd get tapped to be to the goose. An endless game with no clear winner. Was it good to be the duck? Was it good to be the goose? Was it better to be neither?

Well, the labor market and economy feel a little bit like a game of duck, duck, goose these days. Seems it's hard to know what's good news and what isn't.

Before we get into the specifics, here's the bottom line:

  • The labor market remains strong.
  • The Fed are raising interest rates in effort to cool the economy (slow spending), slow the demand for labor (increase unemployment), and ease inflation (bring down the cost of things).
  • However, while this strategy may cause the labor market to go from a rapid boil to a steady simmer, hiring and retention will continue to be an issue for many employers.

Demand for Workers Remains High, Supply Stays Low

Job Growth and Unemployment. The Fed's aggressive rate-hike strategy is aimed at slowing the economy and stemming demand, which is expected to slow job growth and increase unemployment—but also ease inflation. However, the economy still added 261,000 jobs in October, which exceeded expectations and signals a still-strong labor market with unemployment ticking up only slightly—from 3.5 percent in September to 3.7 percent in October.

Layoffs and Job Quits. Even with the slight increase in unemployment, October's 1.3 million layoffs remain near a record low, which means companies aren't panicking—at least not enough to risk losing their workforce, particularly after seeing how difficult it was to recover workers after pandemic layoffs. And if job quit rates are any indication, workers don't seem to be panicking either. There were 4.1 million job quits in September as workers show they're still willing to leave jobs in search of better opportunities and increased pay.

Labor Force Participation. Speaking of low supply. Labor Force Participation Rate (LFPR), which measures the number of people working or actively looking for work, dropped to 62.2 percent in October (62.3 percent in September). Prime age participation (workers aged 25–54) also dropped in October (from 82.7 in September to 82.5 in October).

Wages and inflation. Employers continue to increase wages in effort to retain employees and help offset inflationary pressures, which came in slightly lower than expected at 7.7 percent but still near decade-highs. Average hourly earnings grew 4.7 percent in October, though with inflation, this increase feels like a 2.7 percent loss in earnings.

Trends in Engineering and Sciences

Job openings and unemployment rates in Engineering and Sciences continues to reflect a significant shortage of workers with these particular skillsets. Between August and October, there were .15 or less unemployed workers in Engineering and Sciences labor categories to fill open positions.

Unemployment in Engineering and Sciences Labor Categories and Industries:

Overall Unemployment

3.7%

Software, Hardware- IT, + Mathematics

2.2%

Architecture + Engineering

1.6%

Sciences—Life, Physical, Social

0.8%

Hospitals

1.8%

Utilities

1.4%

Professional + Technical Services

2.4%

Manufacturing

3.1%

Construction

3.8%

 

In October, every industry hiring engineering and sciences skillsets experienced an increase in job growth over the previous year, though many industries are still battling worker shortages, supply chain constraints, and production shortages—all factors that have contributed to limited growth.

  • In Healthcare, which added 52,000 jobs in October, recent survey results indicate that 85 percent of healthcare facilities are experiencing a shortage of allied healthcare professionals (those distinct from medicine and nursing). In effort to combat this shortage and resulting burnout, companies are increasing hiring incentives and relying more on staffing partners.
  • In Manufacturing, 32,000 jobs were added in October as labor and parts delivery eased in some areas, according to manufacturing indexes. However, they remain a challenge in others, including semiconductors. The Conference Board’s Consumer Confidence Index declined in October to 102.5—close to the 1985 low of 100, which could signal further challenges in manufacturing as consumers reduce spending in the wake of inflationary pressures and high interest rates. Although, food and beverage companies, including Coca-Cola and Chipotle, are reporting a growth in profits.
  • In Transportation, 4,800 automotive jobs were added in October, even though companies like GM have revised EV sales forecasts after slow battery production, partly impacted by hiring challenges, caused a delay in achieving initial goals.

For a complete rundown of trends in Engineering and Sciences, download the data report.

Connecting the Dots

A deeper look into tech layoffs; a quieter, though integral slice of manufacturing; an RSV maternal vaccine breakthrough; and Walmart's foray into clinical trials in effort to reach tougher-to-serve populations.

  1. Leveling off rather than laying off? If you read the headlines, you know Twitter, Lyft, Meta, and other tech companies are cutting jobs. But an important point of consideration: In the heyday of job recovery post-pandemic, many companies stockpiled extra talent with specialized skills “just in case”. Now, as the economy cools, these larger companies can release some of these workers without a hit to productivity. In other words, these layoffs are more a leveling off than they are a hunkering down.

    Perhaps the more revealing metrics—that is, the measures that will really tell us what's going on in the tech labor market—are:

    • the competition among other companies for these let-go workers,
    • how long these professionals are out of work, and,
    • the decision-making process they use to decide where they'll land next.

  2. Tough As Nails, Small as an Elephant. When we talk about manufacturing, we often think about the big-time companies making things we can touch, see, and use. Authors of the new release, The Titanium Economy: How Industrial Technology Can Create a Better, Faster, Stronger America provide an in-depth look at the small, but mighty (and fast-growing) manufacturing companies that are "quietly forming the backbone of America's biggest industries" by manufacturing niche components of everyday items we can't easily see. The authors refer to these companies as the "most dynamic part of the manufacturing sector" and lay out a compelling argument for the future of manufacturing, the technology it involves, and where, exactly, we can find these companies. Read an excerpt of the book.
  3. Closer to RSV immunization. In May, we wrote about the breakthrough therapy designation status Pfizer earned as a result of its maternal immunization that provides antibody protection against RSV in newborns, which can lead to more serious illnesses in some children. Recently, Pfizer announced successful results from the third phase of this trial and shared its plans to submit a Biologics License Application by the end of 2022, another step closer to commercialized use of this immunization.
  4. Using Proximity and Partnerships for Good. Walmart announced plans to launch a Healthcare Research Institute, which involves a range of partners including clinical research organizations, drugmakers, and academic medical centers. Citing community ties and the proximity of Walmart stores to the general population (90 percent of Americans live within 10 miles of a Walmart store) the chain hopes to improve clinical trial access to a more diverse population.

Past Issues:

References:

Actalent's October 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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