Looking for a career change? What the new Goldilocks labor market means for job seekers and workers
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- Indeed's Nick Bunker said we're settling into a time of "a more boring labor market."
- Business Insider looked at how components of the labor market have settled down, like wage growth.
- Bunker said "Job seekers still have some bargaining power," but he added, "more employees are staying put."
If you just recently entered the labor force, you may be curious what happened to the sky-high job openings, the massive number of people quitting during the Great Resignation, and hot wage growth.
Well, the labor market is looking more like the healthy but boring era of 2018 or 2019, Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told Business Insider. That's opposed to the wild swings we saw during the COVID-19 pandemic.
Bunker said we're seeing less drama in jobs data.
"That's a good thing in my view," Bunker said, given "an incredibly dramatic" few years.
Job growth is still doing great though; the US just added 303,000 jobs in March, although that's a slower pace than during the height of the pandemic recovery.
Wage growth has slowed. The share of Americans working or looking for work has held mostly steady since spring 2023. Job openings have also dropped — and have been at a rate of 5.3% for three straight months. The number of layoffs and discharges have been low.
And that more boring but steady labor market could be great news for workers and job seekers. Julia Pollak, ZipRecruiter's chief economist, told Business Insider the minimal changes are great amid a labor market that's resilient, stable, and robust.
"Everything is holding on better than most people had predicted," Pollak said.
Pollak pointed to employment strength in construction and manufacturing. Construction employment for March was 7.8% higher than the pre-pandemic level in February 2020. Manufacturing employment was 1.4% higher, and its employment was unchanged from this past February to this past March.
The long-feared recession following the wild swings of the early pandemic years has yet to emerge and may not even be on the horizon. "I think stability at a time of high interest rates and restrictive monetary policy expected to lead to losses and declines is something to be celebrated," Pollak said. "And, most of the small changes lately have been in the right direction."
The US could be in a Goldilocks job market. The four charts below show what that looks like.
Job quitting
People looking for a new job have bargaining power, but workers are more likely to stick around their current gigs.
"Job seekers still have some bargaining power but are less willing to demonstrate that power by leaving their jobs," Bunker said. "With fewer new job opportunities and less of a pay bump for switching roles, more employees are staying put. However, layoff rates are still low, so workers have robust job security compared to pre-pandemic levels."
Newly released data for February showed the US quits rate had been 2.2% for four straight months. This rate has cooled down from 3.0% in April 2022. There were 3.5 million quits in February, which the BLS news release noted this metric "was little changed."
Wage growth
Average hourly earnings increased 4.1% from March 2023 to this past March, lower than the year-over-year increase of around 6% in March 2022.
Despite that slowdown, wages have recently been growing faster than prices, meaning workers have more buying power.
"That means real money in the pockets of working families," Julie Su, acting secretary of labor, told Business Insider. "It's exactly what we'd want to see."
Inflation in March, as measured by the year-over-year percent change in the Consumer Price Index, ticked up a little last month, but remains less of a problem than last year. It climbed 3.5% from March 2023 to March 2024, compared to a 3.2% increase from February 2023 to February 2024.
Given moderating wage growth, the Fed could be more inclined to lower interest rates later this year. Pollak said the cooler wage growth is "good news for a Fed that's still battling inflation."
Job switchers are seeing higher wage growth than people staying, according to the 12-month moving average of median wage growth from the Atlanta Fed's Wage Growth Tracker. Wage growth has slowed, though, for both job switchers and stayers.
"Nominal wage growth may have slowed, but real wage growth — which is what really matters for workers' purchasing power — remains positive and high," Pollak told BI. "Job switchers and current workers are still experiencing solid real wage growth and have clearly retained much of the leverage gained during the pandemic. They are getting recruited, negotiating their job offers, and are receiving counteroffers from old employer's intent on retaining them at historically high rates."
Unemployment insurance claims
Initial claims for unemployment insurance can be a helpful layoff metric, spiking when lots of people lose their jobs. Right now, the boringly low rate of those initial applications for benefits suggests that any kind of large-scale layoffs still have yet to emerge.
Initial claims decreased from the week ending March 30 to the week ending April 6. In general, initial claims have been low so far this year compared to the high level of weekly claims during the pandemic.
"Although there is plenty of speculation that employment has slowed down, recent numbers, including job openings as well as initial jobless claims, continue to indicate that the US labor market has remained stable," Eugenio Alemán, Raymond James' chief economist, said in a note earlier this month.
Unemployment
Back in January 2021 the unemployment rate was 6.4% after spiking into the double digits during the pandemic shutdowns in spring 2020. It has cooled down to 3.8% this past March, just above the historically low rates seen through most of the last two years.
Additionally, the number of people who went from being employed to unemployed has not seen too dramatic of a change; this number was around 1.5 million for each of the past few months.
So what will happen to the Goldilocks job market?
"It would be nice to live in a world where we have low unemployment and there's steady, consistent gains in wage growth and more people coming into the labor market," Bunker said. "So hopefully, fingers crossed, dramatic days are behind us and we can see some strong gains for workers, for job seekers. But, not in the way that feels discombobulated."
While openings, wage growth, and the hires rate have cooled, the overall labor market can be described as more Goldilocks-like, or not too hot and not too cold.
"It's a labor market that has strength, and there's a path ahead of it where it can continue to grow in a sustainable manner," Bunker said.
Juliana Kaplan contributed reporting.
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