November Wages and Job Growth Exceed Expectations

Despite efforts from the Federal Reserve to slow down hiring, including a sixth consecutive interest rate hike this past month, job growth for November shattered expectations. Following a slowdown in October, economic experts predicted that November would see only 200,000 jobs added. According to the Bureau of Labor Statistics, however, 263,000 jobs were added to the US labor market last month.

This better-than-expected job growth will likely result in yet another interest rate hike by the Federal Reserve as officials worry that a tight labor market will continue to nurture inflation rates. And since the Dow Jones Industrial Average fell more than 400 points following November’s report, the Fed has more reason to be even more aggressive with future interest rate hikes.

Unemployment remains steady

The rate of unemployment for November remained unchanged at 3.7%, just 0.1% higher than the pre-pandemic rate in 2019. This steadying, to the chagrin of the Federal Reserve (who is willing to sacrifice a rise in unemployment for a decrease in inflation), signifies the resiliency of the current jobs market, as all racial, gender, and age groups showed no change in unemployment.

Both the labor force participation rate (62.1%) and the employment-population ratio (59.9%) also remained unchanged in November.

Hourly wages continue to climb

Average hourly earnings grew by 0.6% in November, double what the Dow Jones had predicted for the month. This, undoubtedly, was the main cause of markets falling, as high wage growth coupled with low unemployment often leads to wage pressure by companies. This wage pressure is often accompanied by higher inflation rates, which stoke fears of a recession.

Layoffs not a cause for concern

Tech behemoths like Meta, DoorDash, and Twitter are making headlines for their recent layoffs. However, despite dominating newsfeeds, these layoffs have had little effect on the American economy and jobs market. The BLS reported that the number of persons on temporary layoff (803,000) showed little change from October, while the percentage of jobs losers (both permanent and temporary) only rose by 4%. With an unaffected unemployment rate, economic experts have declared that these layoffs have not translated into a weaker economy.

Treasury Secretary Janet Yellen echoed this sentiment, saying that tech layoffs have been an “exception”, and don’t indicate a major trend. She cited “special circumstances” such as decreasing ad revenue – not a weak economy – as a major reason for the layoffs.

The leisure and hospitality industry keeps growing

The clear winner from November’s jobs report is the leisure and hospitality sector, as it added an astounding 88,000 jobs this past month. November marks the largest jobs increase for the industry as it averaged 82,000 jobs a month thus far in 2022.

Other thriving sectors from November include healthcare (45,100 jobs added) and social assistance (23,000 jobs added), which together added 68,100 jobs to the American economy. Employment in retail trade and warehousing, on the other hand, saw decreases in the number of jobs added when compared to October.

Adecco is here to help 

With a job market that changes month-to-month, it can be hard to predict what’s coming next. When talking to SHRM about the possibility of a recession in 2023, Haley Damm, director of workforce planning at Adecco, took note of how this uncertainty is playing out.

“The Federal Reserve’s efforts to curb inflation by raising interest rates is playing a role in the leveling of available jobs, which still exceeded 10 million openings in October,” she said. “Workers continue to have the upper hand in the labor market.”

Luckily, our services will help you stay ahead. At Adecco, we can quickly mobilize the right pre-qualified temporary and direct hires at the best pay rate to match market demand. In addition to connecting you with experienced workers, we’ll help you retain them through optimized wages, benefits, and comprehensive training. Talk to us about how we can help you seize the opportunities today while preparing your workforce for an uncertain tomorrow.