The Bureau of Labor Statistics released the December 2017 Jobs Report on Friday, January 5.
In our monthly Job Market Update, the report unveiled December was the third consecutive month the unemployment rate sat at 4.1%. According to CNN, this brings the total amount of jobs added to US economy in 2017 to 2 million.
Here’s what that means for your business.
Loosening of Requirements
December was the 87th consecutive month to see job growth. This means for businesses searching for available talent, they may have trouble finding it.
In order to fill open positions, companies need to adapt their recruiting requirements and work environments to be more inclusive of workers of various backgrounds, ages, and education. Our senior vice president, Amy Glaser, spoke to The New York Times about one employment trend we saw in December of 2017, particularly in the warehouse industry – hiring workers with criminal records, no education and/or prior experience.
“Two years ago, companies required warehouse workers to have high school diplomas and experience with the scanners used to track merchandise. Now, increasingly, they require neither.”
Additionally, companies need to pay closer attention to the different generations within their workforce – particularly aging workers.
Labor participation rates for those aged 65+ have increased by as much as 20% around the world. Longer life spans, the Recession, and fragile finances are all reasons the aging population wants to work for longer, but few employers actively recruit or adapt their workforces to be inclusive of this population.
The Takeaway: In a tight-talent economy, evaluate your recruiting tactics for requirements that are stopping you from finding the workers you need, and evaluate your outreach strategies for generational gaps.
Wages and Other “Perks”
While December reported a 9-cent wage average increase – the largest gain for one month last year, bringing wage growth to an average of 2.5% in 2017 – wages are still far below where they have sat historically when the economy is this healthy.
The sluggish growth of wages has puzzled economists for months, and no one seems to have a clear answer.
Elise Gould, Senior Economist at the Economic Policy Institute, told NPR employers don’t feel the need to offer higher wages because only about 80% of the prime age population is currently working – meaning there is still about 20% of them unemployed and potentially searching for work.
Our Senior Vice President, Bill Ravenscroft, believes employers are vying for talent by offering new perks instead of raising wages. Providing on-site child care, offering raffles to win high-tech items such as laptops or televisions or paying for employees’ lunches are all tactics being explored by warehouse and distribution industries in place of higher wages.
“These types of benefits in the past, you associated them with Silicon Valley, start-up companies,” Mr. Ravenscroft said. “They weren’t synonymous with your traditional employers.”
Takeaways: We shared our own expert opinions on wages in our article, “What’s Up with Wages in America?” On January 1, 18 states increased minimum wage, and it’s only a matter of time before remaining states follow suit. To truly beat the competition for talent, you need a combination of higher pay rates and added perks. It’s a candidate’s market, but you can live in it strategically if you stay ahead of the curve, and become your market’s “employer of choice,” vs. the last resort.
Manufacturing employment rose by 25,000 jobs in December, largely due to the durable goods industries – products that last a while, such as washing machines, automobiles, or furniture.
According to NPR’s “Hidden Gems of the Jobs Report,” Jed Kolko, Chief Economist at Indeed.com, credits manufacturing’s growth – 1.6% for 2017, faster than the overall rate of job growth – to our exports becoming cheaper in other countries, and President Trump’s encouragement of investment in US manufacturing.
The New York Times said similarly, stating the President’s push to dismantle regulations on businesses has emboldened corporations to put funding into machines and plants – the kind of spending that drives broad growth. However, the Bureau of Labor Statistics Employment Projects for the 2016-26 Decade only estimate goods-producing sectors like manufacturing to grow at a rate of .1% per year, while service-providing sectors are expected to grow at a rate of .8% per year.
The industry projected to have the most growth in the next decade? Healthcare, with a more than 700k employment change by the year 2026. This is due to the aging population continuing to drive demand for health care services such as personal aides, home aides and nurse practitioners.
The Takeaway: The manufacturing and health industries are the most confident we’ve seen them since pre-recession days. If you work in markets where these industries are prevalent, expect a harder fight for talent as companies explore more competitive wages, benefits and added perks in order to attract the talent they’ll need to meet consumer demand.
To learn more about December’s employment situation – and how your organization could be affected – visit our latest Job Market Update, updated monthly by our experts to keep you your business in the know.