“In many ways, the job market is the last stand of the economy,” said Beth Ann Bovino, chief US economist at S&P Global Ratings, who expects a mild recession in 2023. “Almost every other indicator of economic strength is negative or neutral territory. The labor market has remained positive, but the question is: is it starting to weaken? Everyone looks at that.”
The latest report reflects an incredibly resilient labor market as the Federal Reserve aggressively hikes interest rates in hopes of dampening demand enough to contain inflation. Policymakers are hoping to reduce hiring and vacancies without triggering a spike in unemployment — and that seems possible, at least for now, economists say.
Layoffs in the tech sector signal a slowdown in the economy, but not a recession just yet
“We are obviously in a moment of tremendous risk in the economy right now,” said Adam Ozimek, chief economist for the Economic Innovation Group, a nonpartisan business organization. “One cannot rule out a recession, but the economy appears to be rebalancing towards sustainable growth.”
While employment growth is still buoyant by any measure, it has slowed in recent months. Employers added 284,000 jobs in October, revised up by 23,000 from previously reported figures.
However, the Fed remains concerned that a persistently hot labor market could lead to rising wages, which in turn could exacerbate inflation. Wage growth has slowed in recent months but remains well above historical norms. Fed Chair Jerome H. Powell stressed this week that as long as inflation remains too high, Americans’ wage increases will not lead to higher living standards.
“Right now, inflation is eating away at people’s wages,” Powell said at an event at the Brookings Institution on Wednesday. “But if you want a sustainable, strong labor market where real wages are rising across the wage spectrum, especially for people at the bottom end, you need price stability. And until we restore that, we cannot return to this place.”
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A separate government report earlier this week showed there were 10.3 million job vacancies in October, up from 10.7 million a month earlier. Many of these declines have been concentrated in state and local government and manufacturing.
“There’s a disconnect between workers and jobs,” said Giacomo Santangelo, economist at Monster.com. “You can say that there is a job for every unemployed person, but that is not the reality. There’s a lot of demand in nursing, but if you lose your job at Twitter, Meta or Alphabet, you don’t become a nurse.”
The big disparity: Remote jobs are in demand, but positions are drying up
That divide is becoming more apparent as some companies have announced sweeping layoffs while many others are struggling to find enough workers. Some of the country’s largest employers, including Walmart, Amazon and Google, recently cut thousands of white-collar jobs. Tech firms have weathered a particularly sharp downturn, with sharp job losses and hiring freezes, and media outlets like CNN and the Gannett newspapers announced layoffs this week. Meanwhile, employers in low-wage sectors like education, healthcare and hospitality are reporting widespread labor shortages. (Amazon founder Jeff Bezos owns the Washington Post.)
Roxanne Pauni, who owns a daycare center in Logan, Utah, says she’s hired at least 80 people over the past two years, though they’re down to 25 now. She’s increased her hourly wage from $9 to $15 an hour, but still struggles to find and keep her employees.
“You get a few good workers here and there, but some of them are only good for a paycheck or two,” she said. “It’s hard to keep up when everyone else in the area is also trying to hire.”