November’s U.S. Jobs Market: A Closer Look at What the Numbers Reveal
Economists have sounded the alarm bells of a coming recession for so long that it might surprise some that the U.S. isn’t yet in one. Once again, the jobs market stayed strong in November, with employers adding 263,000 jobs. And the Labor Department said the unemployment rate was at 3.7%, close to the lowest level in half a century. Still, the November jobs market did slow compared to October’s 284,000 jobs, and economists brace for the moment when the cracks in the labor market begin to show.
For the week ending December 17, adjusted data showed a slight uptick in unemployment claims from the previous one. Could this be a sign that things could be weakening beneath the surface of a strong job market?
The mixed signals from these reports make it difficult to predict what will happen in the economy and when. Are there different job market factors that could help explain why the market appears so strong? Erik Stettler, Chief Economist at Toptal®, provides context.
“These contradictory signals speak to a far deeper fragmentation and restructuring in the labor market that we must address for the good of the economy and as a moral imperative as a country. We speak of the labor market as if of some singular dynamic of supply on the one hand, demand on the other.
When in fact, when you look at the underlying data, there are many different labor markets across different dimensions with vastly different realities today. They differ, for example, by education. With people without four year degrees leaving the workforce at disproportionate rates due to their frustration over their perceived prospects and their frustration over their relative wage growth over the past many years. They differ by sector with various sectors, such as technology undergoing significant structural change at the moment, after the rapid closures and then reopenings during the pandemic.
They differ by race, they differ by class and related to both, they differ by geography. So I would say it’s less a question of weakness and more a question of disconnect in terms of how companies are going about attempting to source talent and what that talent most values and where that talent can most be found. A recent LinkedIn study, for example, found very different realities for the markets for remote versus non remote positions, with two job seekers seeking out every remote position available. While that ratio is effectively flipped for non-remote positions, what this means is that companies continue to overly.
Themselves to the talent pool within their most immediate vicinity. While the talent continues to both value the flexibility of remote work and in many cases require it in order to participate in the first place. Remote work goes well beyond just geography. It touches upon every other point that I’ve previously mentioned.
Hiring outside major urban centers allows for hiring people of less economic means and less formal education who are always the most affected during recessions. It means being able to hire more parents, especially single parents who may be unable to afford the skyrocketing costs of daycare. It means being able to hire more people with disabilities, which is over 60 million Americans.
I would therefore challenge us to not allow this moment of crisis to go to waste, but to really reconceive of what we mean when we talk about the labor market, how it functions and how it must function in the future. If we can achieve a more flexible dynamic in terms of how we bring people and opportunities together, then we can achieve a labor market that weathers any economic storm with far more, far greater or versatility.
That gives far less inflationary pressure and that helps achieve the kind of dynamic economy and inclusive society that we all aspire to, where everyone can contribute to their greatest ability.”
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