BLS Analysis for Recruiters September 2021 – 5 articles

Bob Marshall’s September 2021 BLS Analysis for Recruiters; 10/8/21

The 5 September BLS Analysis Articles…

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Delta Variant Tempers ‘Blockbuster’ Economic Growth: University of California Los Angeles Forecast

Daily News, September 29, 2021

Hopes for blockbuster economic growth in the US have been tempered by the spread of the Covid-19 Delta variant, according to the University of California Los Angeles Anderson Forecast released today.

The Delta variant has led to consumer caution and supply constraints, according to the forecast. Still, the next few years should feature solid, but unspectacular growth.  And the report predicts gradual gains in employment over the next several quarters instead of the monthly gain of more than 1,000,000 jobs previously forecast.

Previous UCLA Anderson Forecast reports had pointed to a strong recovery as the Covid-19 vaccines became widely available and case rates went down.  Vaccination rates have plateaued since the last forecast report in June and the Delta variant has quickly spread.

“What makes this growth ‘ho-hum’ is the comparison to what could have been if, globally, we had gotten Covid under control and had been able to transform pent-up demand, pent-up savings and a tremendous amount of government support into faster economic growth,” Leo Feler, UCLA Anderson senior economist, wrote in the forecast report released today.

Feler also noted the US economy remains down 5,300,000 payroll jobs from its pre-Covid peak, and there’s little evidence to suggest the expiration of enhanced unemployment benefits will lead to a surge in job applications.

“The forecast is for more gradual gains in employment over the next several quarters,” he wrote.  “We are no longer forecasting average monthly gains over 1,000,000.  Going forward, we are forecasting average monthly gains of 330,000 in the near term, declining to 170,000 by the end of 2023.”

The UCLA Anderson Forecast estimate for average annual GDP growth for this year is 5.6%, down from the 7.1% predicted in the previous report in June.

For 2022, GDP growth is expected to be 4.1%, down from the previous projection of 5.0%.

However, the report raised predicted GDP growth for 2023 to 3.1% from the June prediction of 2.2%.

GDP Forecast Cools, but US Jobs Projections Hold Steady with Return to Pre-Covid Levels by End of 2022

Daily News, September 27, 2021

The forecast for growth in US gross domestic product cooled, but projections for jobs held steady, according to the “Outlook” survey report released today by the National Association for Business Economics.  Job levels are forecast to return to pre-Covid levels by end of next year.

Of the 47 professional forecasters surveyed for today’s report, the median forecast for real GDP called for a 4.0% annualized growth rate in this quarter, the third quarter.  That’s down from the forecast of 6.2% growth in the previous NABE survey released in May.  It’s also down from the second quarter’s actual growth rate of 6.6%.

“NABE Outlook survey panelists have moderated their expectations about the prospects for economic growth in 2021 since May,” said NABE President-elect David Altig, executive VP and director of research, Federal Reserve Bank of Atlanta.  “The panel’s view has become more tempered about 2021 as a whole, as its median real GDP growth estimate for 2021 is 5.6%, compared to the 6.7% forecasted in the May 2021 survey.”

When it comes to jobs, 67% of survey respondents anticipate nonfarm payrolls will return to pre-Covid levels by the end of 2022.  That is similar to the 66% who said the same in the previous survey in May.

Other jobs forecast findings:

  • No consensus on labor shortage: 44% of panelists indicated their companies were not experiencing a labor shortage while 35% said they were. 21% were not sure.
  • Panelists now expect monthly nonfarm payrolls in 2021 to increase by an average of 558,000, down from the 566,000 anticipated in the May survey.  Employment growth is not expected to be as strong in 2022 as in 2021; the median forecast calls for 321,000 net new jobs per month — approximately 14% higher than the 281,000 expected in the May survey.
  • Panelists expect the US unemployment rate to decline steadily through 2022, reaching 4.0% in the fourth quarter of 2022.
  • Nonfarm business compensation per hour is projected to increase by 4.0% this year and is expected to slow to 3.5% in 2022.

NABE’s survey also looked at inflation.

“Inflation expectations have moved up significantly from those in the May 2021 survey,” added Survey Chair Holly Wade, executive director, NFIB Research Center, “but panelists anticipate inflation will ease in 2022.”

Hiring Right Talent is Greatest Challenge for Small Businesses; Top Issue is Need to Raise Wages

Daily News, September 22, 2021

Hiring the right talent is the No. 1 challenge for 63.4% of small businesses, according to survey data released by the Score, an organization — funded in part by the US Small Business Administration — that matches volunteer mentors who have entrepreneurship experience with business owners.  In addition, 61.2% reported unfilled job openings.

“Workers are leaving their jobs in record numbers due to lack of childcare, low wages, fear of Covid-19, long commutes, and changing values and priorities,” said Betsy Dougert, VP of external relations for Score.

Specific issues making hiring difficult now include the need to raise wages, cited by 54.7%, followed by inability to find qualified applicants, 53.0%, and general lack of applicants, 48.9%.

In a similar survey by Score in 2017, only 26.2% of businesses cited the need to raise salary as making hiring difficult.

This year’s Score survey took place from July 9 through July 26 and was completed by 1,712 entrepreneurs who were contacted from a list of 16,265 who agreed to be contacted for research.

Hot Wage Growth Likely to Cool by End of Year, but Surge Again by 2023: The Conference Board

Daily News, September 15, 2021

Wages this year in the US have increased at the fastest pace in more than 20 years, fueled by a rapid economic reopening in the wake of Covid-19 vaccinations, according to a new report released by The Conference Board.

The report, “Why Wages Are Growing Rapidly Now — And Will Continue to in the Future,” maps out 3 distinct phases for wage growth in the US through 2022 and beyond.

Spring and summer 2021.  Wages and salaries for private industry workers rose at an annualized rate of 4.3% over the 6-month period ended June 2021 — much higher than the average rate of 2% to 3% over the past 2 decades.

Heated wage growth continued through summer 2021, especially for blue-collar and manual services jobs.  These workers were in high demand as the economy reopened, even as pandemic concerns such as fear of infection and lack of childcare continued to keep many out of the workforce.

Faster wage growth could have a significant impact on consumer and producer price inflation.  If higher costs are passed through to consumers, this could lead to a longer period of high inflation.

Late 2021 through 2022.  Wage growth should cool heading into 2022, settling closer to an average of 2.5% to 3% by next year.

This cooldown reflects the resolution of demand-and-supply mismatches as more workers reenter the labor market.  However, another significant wave of coronavirus infections that limits in-person instruction in schools could reduce the willingness to work among some unemployed persons and delay the beginning of the slowdown in wages.

The acceleration in wages for new hires in 2021 could lead to a unique situation, where new hires earn more than current employees with more experience.  Such inequity could lead to higher labor turnover of more experienced workers, who can easily find new jobs at higher wages in this tight labor market.

Inflation is emerging as a downside risk for employers.  After being a non-issue in wage determination for several decades, strong inflation in 2021, and perhaps 2022 — if households’ long-term expectations rise — is likely to push wages higher.  In a more extreme and less likely scenario, high inflation and severe labor shortages could lead to a wage-price spiral, where higher prices and wages feed each other, leading to faster growth in both.

2023 and beyond.  Wages will grow rapidly in some occupations in 2023 and onward, most notably in blue-collar and manual services industries.  Historically strong job growth from 2021 to 2022 is likely to significantly lower the unemployment rate.  If history is any guide, this trend is likely to continue until the next recession, which could occur 5 to 10 years from now.

Blue-collar and manual services will again reap significant rewards, as the shrinking of working-age Americans without college degrees curtails the long-term supply of workers in these fields.

The pace of automation will shape how rapidly employment grows, and the unemployment rate dropping depends partly on the rate of automation.  Ultimately, more automation will reduce the demand for labor and delay a decline in the unemployment rate.

The shift to remote work will significantly impact not only how we work, but also how wage trends develop in the near term.  Employers operating in expensive labor markets may be able to lower overall labor costs by hiring more workers in cheaper US labor markets or abroad.  Moreover, many companies are likely to have flexible wage structures allowing differentiation in compensation across regions.

More Than One-Third Quitting Over Revoked Remote Work Policies

Daily News, September 13, 2021

Employees place a high value on remote work, and 44% know at least one person that has quit or is planning to quit because their employers are requiring them to return to the office, according to a survey released today by FlexJobs.

29% are actively looking for a new job because they want to work remotely, while 17% have quit a job because it did not offer remote work options.

The survey also found 21% would give up some vacation time, and nearly a quarter, 24%, would take a 10% to 20% cut in pay in order to work remotely as much as they want.

Post-pandemic, 58% prefer a fully remote job, and 39% want a hybrid arrangement that combines both office and remote work; only 3% report wanting to return to the office full-time.

However, 42% report that post-pandemic, their employers will require them to be in the physical office; 27% will have hybrid work arrangements and 17% will be fully remote.  The remaining 14% were unsure of their company’s plans.

The survey also found that toxic culture is the No. 2 reason people would not apply, not accept or quit a job, second only to a low salary.

Poor communication from leadership was the biggest mistake made by employers during the pandemic, as well as not fully understanding the stress of work-life conflicts during the quarantine 

The survey was conducted from July 21 to Aug. 9; it included more than 4,600 respondents.