In a surprising May jobs report, the Labor Department reports U.S. employers added 2.5 million jobs as some states began to ease coronavirus restrictions. Economists had expected further job losses. The unemployment rate fell to 13.3%. Year-over-year wage growth was at 6.7%. This is because the vast majority of the job losses in April were in lower-wage roles.
The Numbers
2.5 million: Employers added 2.5 million jobs in May.
13.3%: The unemployment rate fell to 13.3%.
6.7%: Wages increased 6.7% over the last year.
The Good
The May
numbers surprised economists and point to good news. According to MarketWatch, analysts had expected the May report
to reflect a third straight month of job losses—a predicted loss of 7.25
million. Economists surveyed by Dow Jones expected an even worse 8.33 million
loss. However, in May, employers added 2.5 million jobs, the highest single
month gain since records began in 1948.
Nearly half
of the job gains came in leisure and hospitality, a reflection of restaurants
reopening as some states began to ease coronavirus restrictions. Additionally,
many bars and restaurants received assistance from the government Paycheck
Protection Program. This indicates that the U.S. economy may be on the road to
a faster than expected recovery from the coronavirus pandemic.
According to CNBC, the job gains nearly perfectly
mirror the 2.7 million Americans who had reported their layoffs as “temporary.”
Economists had been concerned that many of those layoffs would become
permanent.
The Bad
While the
large increase in employment is good news, the unemployment rate is still
higher than any other recession since the Great Depression. Additionally, a
broader measure of unemployment that includes jobless workers, those working
part time and those who have given up the job search because they are too discouraged
was at 21.2%, according to the Wall
Street Journal.
The
unemployment rate also varies based on gender and race. The rate for Hispanic
and Latino workers was 17.6% and it was 16.8% for black Americans. While Asian-Americans
face 15% unemployment and white workers are at 12.4%. The unemployment rate is
also higher for women.
Job postings
have also started to rise but are still far below the pre-pandemic numbers.
The Unknown
The COVID-19
pandemic leaves employers and economists with a lot of unknowns. As the New
York Times reports, the $2.8
million stimulus is still helping the economy, but much of that assistance is
set to end over the summer, including the enhanced unemployment benefits, which
are set to end at the end of July.
It is also unclear how long companies can survive with decreased business, as many consumers choose to stay home and spend less. Additionally, experts worry about a second surge in coronavirus cases, which could hit in the fall.
U.S. employers shed 20.5 million jobs in April as the coronavirus crisis began to show its real impact. The unemployment rate rose to 14.7%, the highest level since the Great Depression. Year-over-year wage growth rose to 7.9%. This is because the vast majority of the job losses were in lower-wage roles. The numbers are even more bleak than they appear. The government’s definition of unemployed typically requires that people be actively looking for work. Additionally, 9 million workers claimed they were out of work for other reasons. If those people are counted, the unemployment rate jumps closer to 20%.
The Numbers
20.5 Million: The U.S. economy shed 20.5 million jobs
in April
14.7%: The unemployment rate rose to 14.7%.
7.9%: Wages rose 7.9% over the last year.
What We Know
The New
York Times reports that the job losses in April alone are more than double the
entire previous recession, where 8.7 million jobs were lost and unemployment
peaked at 10% in October 2009. The only comparable period was during the Great
Depression. In 1933, unemployment reached around 25%, but the government did
not report official monthly statistics until 1948.
The leisure and hospitality industry was hit especially
hard, with more than 7.65 million jobs lost. That includes all jobs gained in
the industry since 1988. Women and minorities were particularly hard
hit, with the unemployment rate for Latino and Hispanic workers jumping to
18.9%, and the rate for women jumping to 16.2%.
The massive increase in hourly wages reflects the fact that the majority of the layoffs were in lower-wage positions, while higher-paid, white-collar workers were more likely to hold on to jobs.
What We Expect
The unemployment rate will likely continue to rise in May,
according to CNBC,
which predicts a rate around 20% for the month.
The numbers may also already be higher than the report
currently reflects. MarketWatch
reports that some furloughed workers or others who considered themselves
employed, even though they weren’t working, were not counted. If those workers
were counted, the rate would be around 20% already.
Are There Any Bright Spots?
“Bright spot” is relative in this report. However, 78.3% of
those who were laid off in April consider the separation temporary, while 11.1%
say the layoff was permanent. This means those jobs could return if the
COVID-19 crisis improves, but it also means those layoffs could become
permanent if the situation worsens.
There may also be a bright spot for companies who have the resources to hire during the crisis. Harvard Business Review reports that this is an unprecedented opportunity to hire high-quality talent. There are a lot of highly skilled workers, from recent graduates to experienced leaders who are looking for work right now. Employers who can hire during this crisis can bring in strong people who otherwise might not have been seeking new opportunities.
As organizations around the globe confront talent scarcity challenges, even the most seasoned talent leaders find themselves in uncharted territory. This profile shares insights from PeopleScout Global Leader of Solutions Design, Krista Sullivan de Torres. Krista is a seasoned professional with more than a decade of human resources and talent acquisition experience. While Krista’s professional experience spans many industries, she has a passion for and deep expertise in healthcare recruitment. Her experience includes launching RPO programs for healthcare startup organizations, managing RPO operations for managed care, population health, behavioral health, and healthcare system clients. Krista’s specialties include global talent acquisition team design, talent acquisition operations, analytics and reporting, recruiting, sourcing and retention. Krista holds a bachelor’s degree in Mathematics from the University of California, Santa Cruz.
Krista shared her insights about hiring solutions for healthcare providers from her home office in Florida.
Ebook
How RPO Can Solve The Top Challenges In Healthcare Talent Acquisition
What are some of the hiring challenges facing the healthcare industry right now?
Prior to the COVID-19 crisis, there were already many challenges around healthcare hiring. We all hear about the shortage of nurses, but there’s also a shortage of clinicians across the board. Since the outbreak of COVID-19, we’ve seen an increased number of patients, so these shortages have become even more acute — particularly in the areas that have been hit hardest with the disease. In addition, some challenges arise when clinicians who have COVID-19 risk factors, or live with someone who does, are now unable or unwilling to work in order to protect themselves and their families — causing a large strain in hiring for these specialized roles.
Hiring for a healthcare role, clinical or nonclinical, is much more difficult than hiring in many of the other essential industries right now. How and why is that?
Regardless of whether we’re hiring for a role that is clinical or nonclinical, there are a lot of additional requirements for working in healthcare than there are in most other fields. If a candidate is going to be working directly with patients, particularly those that are most vulnerable, an extremely thorough background check is necessary to protect the safety of patients. So, rather than a traditional pre-hire online form and standard background check, healthcare candidates will undergo additional criminal history checks, fingerprinting and more. These critical checks tend to slow down the hiring process and can add a layer of complexity when we’re looking at the available workforce.
Another factor affecting hiring is that a lot of people are a little afraid to work in the healthcare industry right now. As I mentioned earlier, people may be cautious about taking a job in healthcare in order to protect themselves or high-risk family members against COVID-19. In addition to there being a challenge in the number of candidates available to start, we are faced with the challenge of selecting the right people for the job and ensuring we have a pool of candidates who are excited and available to work during this unusual time.
Lastly, a major factor we consider in the healthcare industry — particularly in a clinical setting — is ensuring healthcare workers are extremely customer-focused. We look for people who are very focused on the patient and the patient’s family. We’re facing challenges in the spike in the number of people who are severely ill, so ensuring we have workers who are correctly educating and caring for patients is of the utmost importance.
What sort of hiring solution for healthcare providers are available right now?
A lot of healthcare organizations are really trying to get creative during this critical hiring time due to the healthcare talent shortage. They’re looking to potentially bring back previously retired workers, flexing up hours for part-time associates and bringing in traveling nurses or clinicians to support them where their internal teams are at capacity. Many organizations are also interested in implementing a recruitment process outsourcing (RPO) solution to quickly get short-term support in locations that are particularly hard-hit.
How do these RPO solutions work in practice? What are some of their benefits?
That’s a great question. One of the many benefits of healthcare RPO is that we’re able to ramp up very quickly to meet client needs. For example, a client came to PeopleScout when they needed to rapidly scale up hiring to support their hospitals. We spoke with the client, came up with a solution and worked through the contracting phase all within three days. It helps that PeopleScout has a large team of clinical and nonclinical healthcare recruiters who are trained to know the industry and can identify high-quality candidates to get the pipeline filled quickly.
When it comes to on-demand recruitment support, the beauty lies in rapid engagement and disengagement. Once immediate hiring needs are fulfilled, an RPO provider can pull recruiters back in-house and assign them to a new project. This is a great benefit for clients — they don’t need to deal with the stress of layoffs and furloughs because they’re able to engage and disengage experienced recruiters as needed.
The most important thing right now is to keep everyone safe and healthy. What is the best kind of solution for that?
One important way to keep people safe while still meeting critical talent needs is to use a virtual hiring solution for healthcare providers. PeopleScout has a bit of an advantage here because we were a virtually based culture even prior to the COVID-19 crisis, so many of our recruiters were already working from home. Our virtual solution allows us to conduct digital interviews — on-demand or live — so we can continue to safely service our clients without interruption. We’ve been able to effectively maintain — and in some cases exceed — productivity while also minimizing the risk for our clients, candidates and internal teams.
Are there any final thoughts on hiring solutions healthcare providers you’d like to leave us with?
We’re all going through a really challenging time right now and trying to support one another. We’re all in this together and PeopleScout is here to support our clients, candidates, teams and prospects in any way we can.
U.S. employers shed 701,000 jobs in March as the coronavirus crisis began to impact the country. The unemployment rate rose to 4.4%. Year-over-year wage growth rose to 3.1%. This ends the longest continuous economic expansion in U.S. history.
The numbers
are expected to grow even more bleak in the coming months. The March numbers
are based on reports from the first two weeks of the month, before many states
implemented stay-at-home orders. Therefore, the full impact is not yet known.
The Numbers
701,000: The U.S. economy shed 701,000 jobs in March
4.4%: The unemployment rate rose to 4.4%
3.1%: Average hourly wages rose 3.1% over the last year.
The March Losses
The job losses
are most significant in the leisure and hospitality sector, which shed 459,000
jobs as bars and restaurants closed and international and most domestic travel
came to a halt. The March jobs report was the biggest monthly drop since the
worst months of the Great Recession.
According to
the New
York Times, even industries
that had initially continued running, like manufacturing, are starting to see
major impacts as factories close. The job losses are also spread across industries
considered essential, including healthcare, as dentists and other non-essential
healthcare providers have closed their doors until the pandemic lifts.
There are
very few bright spots in the report. Some employers in the transportation and
warehousing sector and grocery stores have picked
up hiring to meet increased demands.
What’s to Come
The numbers
are likely to get far worse in the coming months. As MarketWatch reports, the March numbers don’t
reflect the approximately 10 million people who filed for unemployment during
the final two weeks of the month.
The Wall
Street Journal reports that
the U.S. could lose 27.9 million jobs and have an unemployment rate as high as
16% by the end of May. The nonpartisan congressional budget office predicts
that unemployment will pass 10% in the second quarter of the year. April’s job
report could show the largest ever drop in employment.
The Labor Department released its February 2020 jobs report which shows that U.S. employers added 273,000 jobs in February, which beat analyst expectations. The unemployment rate fell to 3.5%. The labor force participation rate remained at 63.4%. Year-over-year wage growth fell to 3.0%. U.S. employers have now added to the payrolls for 113 straight months, extending the longest continuous jobs expansion on record.
The Good
The headline numbers in the February jobs report are good
news. According to MarketWatch,
analysts had expected just 165,000 new jobs—far below the 273,000 added last
month. The strongest gains came in healthcare, restaurants, construction and
government jobs. Healthcare providers alone added 57,000 positions. This provides
a strong baseline for the economy as concerns over the coronavirus grow.
The Bad
Despite the strong numbers, the New
York Times reports that there are vulnerabilities in the economy. Business
investment and wage growth have been sluggish for months. Hiring in
manufacturing is also slowing. Analysts expect job creation as a whole to slow
in 2020.
The Unknown
The biggest concern—the novel coronavirus—has yet to make an
impact on the jobs report. The numbers in the February report come from the
week of February 12—before the U.S. saw an uptick in coronavirus cases or
deaths. Experts say the February report demonstrates a strong baseline against
which they can monitor the impact of the virus in the U.S.
However, the Wall
Street Journal reports that companies are starting to feel the effects.
Airlines and hotels are reporting a decrease in business—with some airlines cutting
back on the number of flights and announcing hiring freezes. Experts also
expect the virus to have a large impact on restaurants, entertainment and
retail. At the same time, there has already been increased growth in the
healthcare and science sectors.
So far, the New York Times reports that the manufacturing
sector is seeing mixed impacts from the virus. Those who depend on parts from
China may be experiencing supply issues. However, some U.S. based manufacturers
are seeing increased demand from companies that previously relied on overseas
suppliers. Over the next few months, economists will be watching the impact
closely.
The Labor Department released its January 2020 jobs report
which shows that U.S. employers added 225,000 jobs in January, which beat analyst
expectations. The unemployment rose to 3.6%. The labor force participation rate
rose to 63.4%. Year-over-year wage growth increased to 3.1%. U.S. employers
have now added to the payrolls for 112 straight months, extending the longest
continuous jobs expansion on record.
The Numbers
225,000: The economy added 225,000 jobs in January.
3.6%: The unemployment rate rose to 3.6%.
3.1%: Average hourly wages increased at a rate of 3.1% over the last year.
The Good
The overall jobs numbers for January look strong. The 225,000
jobs added to the economy beat analyst expectations of just 160,000 in the first
month of 2020, according to CNN.
The growth was strongest in construction, healthcare and transportation and
warehousing. Some of that increase could be attributed to a warmer than average
January.
While an increasing unemployment rate can sometimes be seen as
a downside, in this report, it demonstrates that more sidelined workers are
being pulled into a strong economy. The Washington
Post reports that the labor participation rate hit a seven-year high of
63.4%.
The Bad
The strong hiring numbers in January didn’t apply across all industries. Manufacturing continued to lose jobs. Marketwatch reports that those losses were caused by the trade war with China. Jobs in retail also dropped.
Additionally, the January report included a few revisions
that decreased the number of jobs created in 2019. The overall employment level
for March 2019 was decreased by 514,000 jobs. For all of 2019, the number of
jobs added to the economy fell by 12,000 to 2.096 million jobs.
The Unknown
Despite strong job growth, the yearly wage growth remains lower than expected. The Wall Street Journal reports that the growing number of people reentering the workforce could be a factor in keeping the rate of wage growth from increasing more quickly. However, the cause of the persistently sluggish wage growth has been debated by economists for the past couple of years.
It is also still unclear what impact the coronavirus will
have on U.S. jobs numbers. The easing of the trade war with China was expected
to relieve some of the strain on the manufacturing industry. However, increasing
concern about the virus could impact that. The data used for the January report
was collected before news about the spread of the virus.
The shift toward global expansion is top of mind in many of today’s organizations, and for good reason: going global brings opportunities that may otherwise go untapped—such as new revenue sources, cultural diversification, economies of scale and greater access to talent. So, as your talent program grows, you may be considering expanding beyond your current borders.
Similar to traveling internationally, there are many steps to taking your business’ talent acquisition program global. As you plan for a trip abroad, you may make a packing checklist, get your passport and prepare accommodations. There’s anticipation as you near your trip date, and even some nerves as you take flight. You don’t quite know what to expect, but you’re excited about the possibilities of what you’ll discover. After an invigorating visit, you recount your trip and replay all you’ve experienced – good and bad. Global talent acquisition deployments are similar, and in this article, we’ll outline factors to consider throughout the different stages of implementation.
Choosing Your Global Talent Acquisition Deployment Type
The first item on any
traveler’s checklist is determining where to go. When it comes to global implementations,
get a good handle on the location or locations you’ll be expanding into before
taking off. After considering talent supply, cultural nuances and how easy (or
difficult!) it is to do business in a certain location, selecting a deployment
type should be straightforward.
There are two main types of global talent acquisition deployments:
“Big Bang” Approach: If you opt for this method, you’ll be launching all operations at one time on a singular date. This might be the choice for you if the main goal is compliance to global policies and procedures that align with a specific set of dates and standards.
Phased Approach: This type of deployment type favors a slower rollout of operations over time – which might be helpful for first-generation managed service provider (MSP), recruitment process outsourcing (RPO) or total workforce solutions programs that you want your organization to ease into.
Factors to Consider
After choosing a travel destination, you’ll start looking into the details of the location you’re visiting. What’s the weather like? What language do people speak? Where are the best food spots in town? In essence, seemingly small aspects tend to have large effects on the success of your trip. Likewise, once you’ve taken all of the initial expansion considerations into account, you’re better equipped to further assess pivotal factors that will greatly influence the success of the overall deployment, including the following significant global and local influencers.
Key Stakeholder Identification & Support Capacity
It’s crucial to align
organizational expansion plans with regional cultural norms and any specific
local nuances. For example, when initially organizing the details, are there
any types of communication styles that are considered rude or offensive? This
is crucial to ascertain for positive program adoption from the start. Also, be
sure to frame that local focus to stakeholders, as opposed to communicating a
message that essentially states that a new program will be laid over local
operations. Stress the fact that you’ll be interweaving existing operations
with new features and benefits to ensure maximum success for the program and
all involved.
Additionally, focus on ensuring that all voices are heard—from local teams to individual hiring managers—to avoid any passive resistance; you’ll want to fully understand how people work in that particular location and what day-to-day norms mean to ensure the success of the program. Try putting yourself in the shoes of the end-user; a seemingly simple concept like shadowing can go a long way in showing the local constituency that you’re invested in the success of the program at their specific location.
Availability of Talent
We’re currently seeing low unemployment rates paired with skills shortages across the globe—a trend we haven’t seen consistently in the past. Because of this, consider shifting your focus to soft skills when it comes to assessing the talent landscape in a given region. This means concentrating on skills like critical thinking, problem solving and adaptability to new environments. No matter whether you’re introducing a new industry to the area, carefully decipher what the competition for talent looks like. From there, you can start developing a well-thought-out sourcing plan to align the resources necessary for a successful deployment.
Change Management and Global Talent Acquisition
When done right, change management can have the greatest effect on deployment success. A critical component of managing change in global talent acquisition implementations is gaining buy-in from key, local stakeholders. Then, you can depend on these stakeholders to translate (literally and figuratively), the feedback needed to take into consideration.
Another vital part of
managing change is ensuring the right amount of frequency to ensure consistent
alignment. Rather than one initial message followed by
months of silence leading up to the “go-live” communication, consider a layering approach. Keep communications frequent, consistent and to the point to get
people excited about what’s coming and interested in what the changes mean for
them.
And, as important as it is to keep communication
consistent as you prepare for launch, it’s just as critical post-launch. Reinforce
the benefits people should be seeing, ensuring everyone is comfortable with the
changes and collecting feedback around any training or functionality that may
need revisiting. A high level of communication and comfort translates into
successful program adoption.
When it comes to talent technology, several different factors need to be considered. For an MSP program, the main component is the vendor management system (VMS). Along the same lines, with an RPO program, you’ll be focused on the applicant tracking system (ATS) and any other systems that may need to be integrated for either or both. Similar systems may be utilized across an organization with varying local versions, so it’s important to understand what consistencies exist, as well as gaps that need to be addressed.
Ensure the pros and cons
are carefully weighed across the systems the technology will interface with,
then try to choose one as a “source of truth” for compliance, data validation
and data integrity. In doing so, you’ll see consistency across the talent
technology, giving you a true, holistic view of the workforce when it comes to
analytics and reporting.
Finance & Tax
What’s important here –
and heavily dependent upon the workforce population at hand – is ensuring that there
is clear visibility and guidance around cross-border implications, such as
supplier and provider payments, global and statutory requirements, or
arrangements in which a hiring manager sits in a different location than the
resource. This becomes especially important when there is an integration with
an invoicing system and effects on back-office operations.
The Stages of a Global Talent Acquisition Launch
After months of preparation,
you’re finally leaving for your much-anticipated trip. You just have to check
in to your flight, print your boarding pass and you’re on your way! After a
two-week experience you’ll never forget, you return home to tell your friends
and family every detail of your getaway (even down to the hotel mishap on night
three). Your global deployment will go through similar stages, as outlined
below.
Pre-launch
At the pre-launch stage,
all stakeholders should have a good working knowledge of what’s coming and
when, and you should have a good sense of how everyone is feeling. Are people
comfortable with what’s coming? Are they ready for it? What needs to be
adjusted now based on the feedback collected?
Ensure that all technology
components are operating as planned, and that enough time has been dedicated to
testing different scenarios that will be realized upon launch. The quickest way
to do this is by running through predetermined scripts and observing how the
technology responds. If time allows, some organizations also subscribe to a
“break the system” approach by trying out every possible or one-off scenario –
including erroneous field data – to assess the outcome. While this takes more
time, it also tends to be the most thorough, especially if multiple
technologies are at play.
Successful Launch
When it comes to executing
a successful launch, the biggest components are represented above. As you
progress in the implementation, it’s wise to consistently refine change
management, calibrate resource alignment and pivot as needed, so as not to lose
momentum as progress is made. Remember to share successes along the way, and
not to lose sight of the overall goals of the program.
Furthermore, whether you’re evolving your program or expanding into additional locations, consider the overall maturity of the labor market market and generation of the program you’re launching. For instance, if this is a second-generation program, what do you need to consider from the first launch and potentially change? It’s also important to communicate the fact that unexpected issues may arise and, if they do, it’s critical to address these obstacles transparently.
Post Launch
Once the program expansion
has launched, consider the following recommendations:
Dedicate
time to complete a thorough audit:
Assess how well the goals were met, taking into account that they may have
changed over time.
Schedule
a “lessons learned” meeting:
Identify and capitalize on best practices acquired throughout the launch.
Check
in at all levels of the operation:
Work to understand what is and isn’t working.
As data starts coming in
regularly, analyze for trends that may not have been visible before to determine
any adjustments that need to be made related to resources, processes or technology.
After any trip, you spend some time at home reliving the experience and getting reassimilated with your day-to-day life. You think about what you did and didn’t like, go over what you learned, and naturally decide whether you want to take another trip. Maybe the destination was so great that you want to go back, or perhaps you’re ready for something new. Global talent acquisition implementations are similar, and whether you’ve met your needs with one deployment or are planning for further expansion, the right talent partner can help take you there.
Finding the Right Partner
Choosing a partner to help you through your global talent acquisition deployment is like choosing an airline. Are they reputable? Dependable? Can they get you where you need to be? Most important, can you trust them with your bags? When you’re looking into viable partners to work with for your implementation, ask yourself:
Do they
align with our business needs?
Will
they deliver value across every level of the organization?
Are they
flexible?
Do they
have any proven standards?
Do they
have the ability and experience to tailor operations as needed?
Don’t be shy about asking your potential talent partner to prove their value. Request case studies and demonstrated expertise that illustrates that they have the experience you’re looking for. Finding a partner that is a good fit for your organization is a huge undertaking and you want to make sure you get it right. You’ll likely be working with them for a long period of time, and the success of your implementation will depend on the strength of your relationship and the trust you have in your partner.
Statistics Canada reported
that the nation’s unemployment fell to 5.6%. In December, the economy added 35,000
jobs, beating analyst expectations. The total number of jobs added in Canada in
2019 was 320,000. Average weekly wages increased 3.7% on an annual basis. Ontario,
Quebec, Manitoba and Prince Edward Island all posted job gains, while declines
were recorded in Newfoundland and Labrador.
The Numbers
35,000: The economy gained 35,000 jobs in December.
5.6%: The unemployment rate fell to 5.6%.
3.7%: Weekly wages increased 3.7% over the last year.
The Good
Statistics Canada reported that 35,000 jobs were added to the national economy in December, which in great part reversed the losses recorded in November. In 2019, employment increased by 320,000 or 1.7%. This was primarily due to gains in full-time work which grew by 283,000 or 1.9%. In contrast to the United States, Canada added more jobs in 2019 than in 2018.
From an annual perspective, Ontario, Canada’s most populous province was a clear winner in job growth. Employment in Ontario increased 243,000, an impressive 3.3%. This was the largest year-over-year increase measured in December since 1987, and the growth was driven by full-time jobs in a range of industries. Quebec also posted healthy gains in 2019 adding 63,000 positions growing 1.5% over the year and was driven by full-time work. The strongest gains were from the two groups at opposite ends of the age spectrum, youth aged 15 and 24 and people aged 55 and over.
Weekly wage growth dipped in the final report of the decade on an annual basis, but it is still one and a half percentage points higher than the rate of inflation. Canada ended the year and the decade on a positive note with unemployment dropping three-tenths of a percentage point to 3.6%.
The Bad
At 3.6%, Canada’s unemployment rate was the same in December 2019 as it was in December 2018. In May, the unemployment rate dipped to 5.4% which was a record low since the start of comparable record-keeping in 1976. The ensuing months produced uneven results which disappointed observers hoping for an extended period of historic low unemployment.
While the job gains in December were generally considered strong, they did not completely make up for the November losses. In addition, the strongest sectors for job gains was in accommodations and food service and in construction. While an increase in construction jobs in the midst of winter is considered to be a positive indicator, growth in foodservice and the hotel sector may be short-term since they are closely tied to the holiday season. Even the robust growth in Ontario posted losses in one troubled sector, posting losses for jobs in manufacturing. Most other large provinces had little significant change in their job levels in 2019.
Wage growth, while still strong,
has been fluctuating throughout the year so there is no clear trend that has
been established. Annual pay increases at the hourly level in some key sectors
of the Canadian economy were well below that national rate of 3.6%. For
example, the increase in the sales and services sector, stood at 2.6% in
December, a full percentage point below the national figure.
Future Job Growth: Geography as Destiny?
Over the past year, Ontario accounted for 76% of Canada’s job growth. Based on last year’s numbers, almost all job increases are taking place east of Manitoba. However, when viewed on a provincial basis, these numbers can be misleading. It is instructive to look at some local growth rates to get a more accurate picture. While British Columbia’s job market may be stagnant, Abbotsford and Victoria were ranked third and fourth, on BMO’s ranking of cities with the strongest job markets. Alberta’s relatively sluggish job market is contrasted with Calgary which added 3.3% new jobs last year, vastly outpacing the national rate.
And despite the surface
geographical contrasts, the variance between the best-performing and
worst-performing parts of the country is narrowing. As BMO’s senior economist Robert
Kavcic notes,
“job convergence is taking place all over Canada.” Canadian employers should
look beyond the headlines to assess the accurate jobs situation in their
markets and sectors as they plan their strategies for recruitment and retention
in the rapidly evolving labour environment.
The Labor Department released its December 2019 jobs
report which shows that U.S. employers added 145,000 jobs in December,
which was below analyst expectations. The unemployment rate remained at 3.5%. The
labor force participation rate was also unchanged at 63.2%. Year-over-year wage
growth slipped to 2.9%. U.S. employers have added to payrolls for 111 straight
months, extending the longest continuous jobs expansion on record.
The Numbers
145,000: The economy added 145,000 jobs in December.
3.5%: The unemployment rate held at 3.5%.
2.9%: Average hourly wages increased at a rate of 2.9% over the last year.
The Good
The final jobs report of the
decade showed another month of solid job growth. The average monthly gains for
the last three months of 2019 were 184,000, which is close to the quarterly
averages earlier in the year. In the last year, 2.1 million jobs were added,
which is more than sufficient to keep up with the demands of population growth.
There were notable monthly increases in the retail sector with 41,200 jobs
added, in healthcare which was up by 28,000 and in leisure and hospitality
which grew by 40,000.
From an annual perspective, many
key sectors recorded job growth or were little changed. Growth in healthcare was especially
impressive. The sector added 399,000 jobs in 2019, increasing by 49,000 more
positions than in 2018. Even some industries which experienced setbacks over
the course of the year posted modest gains overall in 2019. Manufacturing grew
by 46,000, and retail jobs increased by 9,000.
The year began with an
unemployment rate of 4.0% in January and ended at a 50-year low of 3.5%. Significantly,
an alternative measure of unemployment which captures those underemployed and
marginally attached to the workforce known as the U-6, fell to 6.7% in December,
the lowest on record going back to 1994.
The Bad
The December report confirmed that
a decade of robust job growth ended with a notable slow-down. The 2.11 million
jobs added last year was a drop from the 2.68 million added in 2018, and 2019
was ranked eighth
for job growth in the past 10 years. With the exceptions of healthcare and leisure
and hospitality, most key sectors added significantly fewer jobs in 2019 than
in 2018. The transportation and warehousing sector which is closely tied to the
overall economic health of both the nation and the world, added just 57,000
jobs in 2019, approximately one-fourth of the 2018 gain of 216,000.
The labor participation rate at
63.2% remained steady. However, this rate is still below the levels posted
before the Great Recession. The stall in participation may indicate that no
matter how low the unemployment rate falls, additional Americans who are out of
the labor force are not being drawn back into it. Some economists have
suggested that an underlying reason for this is the changing age demographics of
the United States due to its low birth rate and aging
population. This trend is not expected to change anytime soon.
Instead of posting strong wage
gains at a time of historic low unemployment, the rate of growth actually
decreased in December. While the 2.9% annual wage increase is still ahead of an
inflation rate of just less than 1.5%,
workers in many sectors are having their wages grow at a rate much lower than
the national average.
Easier to Get a Job Than a Raise
As Diane Swonk, chief economist at Grant Thornton noted: “It’s easier to get a job than a raise in this economy.” While some employers may benefit from attracting those who are seeking a new job due to their stunted paychecks, they may be just as likely to lose talent for the same reason. Adding to the challenge of extremely low unemployment, the most recent jobs opening report showed an increase in vacancies which continues to be higher than those who are unemployed.
The closing
months of 2019 also brought to a close a decade of strong economic growth and
robust labor markets for many of the world’s leading economies. However, the
disruption caused by trade disputes and uncertainties have produced the first
signals that this long period of sustained expansion may be coming to an end.
Among the unresolved issues that continue to affect the global economy are:
The
U.S.-Mexico-Canada trade agreement, which was negotiated to replace NAFTA, has
yet to be ratified by the legislature of all three nations. Author’s note: There may be a vote in the
U.S. Congress in the coming weeks after a deal was struck by the Democratic
leadership and the White House.
The
ongoing trade war between the U.S. and China, the world’s two largest economies,
continues and may continue into 2020.
Uncertainty
over Brexit continued until the UK election on December 11, which very likely
cleared the way for its departure from the European Union. Even with a firm
Brexit date, a final trade agreement with the European Union has yet to be
completed, and negotiations will be closely watched.
While job growth continued unabated in the labor markets of many key economies, the growth came at a slower pace than in 2018. Some of the most developed economies saw the period of sustained job growth halted and some unemployment rates began to climb. In addition to trade uncertainty, political upheaval and natural disasters also had negative effects on important economies in far-flung parts of the world.
Slowing Job Gains & Job Losses Materialize in the Labor Market
The U.S. labor market added 266,000 jobs in November and posted an unemployment rate of 3.5%. November’s results capped 110 months of continuous job growth, the longest period of sustained expansion in the nation’s history. The year began with an unemployment rate of 4% in January, which was the highest level all year. After hitting a half-century low of 3.5% in September, the unemployment rate rose slightly in October, only to come down to tie the fifty-year record level of 3.5%. While job openings steadily decreased to approximately 7 million, this level of openings was still larger than the number of unemployed Americans.
Additionally, the average monthly job growth improved to 180,000 per month in the 12 months leading up to November 2019. However, at the same time last year, the monthly average of jobs created was 223,000. So, while the job market was expanding, it did so at a slower pace than it did in 2018. The sectors that lost some jobs or grew at an anemic rate include manufacturing and retail. And, while manufacturing was disrupted by strikes and ongoing trade disputes, the diminishing jobs in retail were largely caused by the growth in online shopping, which has brought about a so-called “retail apocalypse” in the U.S. and elsewhere.
Canada’s employment numbers were positive in much of the first half of the year and grew worse as the year wore on. After losing less than 2,000 positions in October, Canada’s economy shed 71,200 openings in a single month in November. While more than half of those (45,000) were lost in Quebec, other provinces also lost jobs and none had any notable job gains. Canada’s unemployment jumped 0.4% in November alone, reaching 5.9%. From a national perspective, the weak job outlook was not confined to manufacturing and retail as it was in the U.S.; although these were certainly weak in Canada, as well, it also extended to most major sectors of Canada’s economy.
In Europe, the economic landscape was mixed, with most major labor markets posting low unemployment rates that varied little from earlier in the year. In the UK, 58,000 jobs were lost in the quarter ending in September 2019. This was the second consecutive report with posted job losses, many of which analysts blamed on the uncertainty surrounding Brexit. However, the quarter ending in October showed a modest job increase of 24,000 positions, pushing employment to its highest level ever. Yet, even in the months when employment fell, the unemployment rate also dropped to a low 3.8%, which held steady in the August-October quarter; the UK unemployment rate has not been lower since 1974, well before the living memory of much of the UK workforce. And, while the results of the December national election opened the path for a departure from the European Union in early 2020, provisions of an eventual trade agreement between the UK and the EU remain to be seen.
Elsewhere in
Europe, the Eurozone’s unemployment rate was 7.5% in October, the same as it
was in June, but 0.3% lower than it was at the end of the first quarter. France
posted an unemployment rate of 8.5%, falling from 8.7% in June, while Germany’s
low unemployment rate of 3.1% in October was unchanged from its level in June.
In the Asia-Pacific region, unemployment rates rose in some leading labor markets, but only to relatively low levels. During the third quarter, China’s labor market reported an unemployment rate of 3.6%, a full percentage point higher than in the second quarter. Japan’s rate rose just 0.1% from June to October, landing at 2.4%. After experiencing considerable unrest, Hong Kong’s unemployment rate rose to 3.1% in October – from just 2.8% in June. And, in contrast with the rise in unemployment in other Asian powerhouses, South Korea’s unemployment rate fell an entire percentage point from June to October, ending at 3%. India’s labor market also had a drop in unemployment, falling 0.4% since June, to 7.5%.
The Oceania economies also posted mixed unemployment numbers from their respective labor markets. Australian unemployment was just 4.9% in February, an eight-year low, but it has been higher ever since, rising to 5.3% in October. New Zealand reported that its unemployment rate had fallen to 3.9% in the second quarter of this year – down from 4.3% at the end of 2018 – but then rose to 4.2% in the third quarter.
Wage Increases Outpace Inflation in Key Labor Markets
Annual wages have continued to grow faster than the rate of inflation in most leading economies. The U.S. annual wage increases stood at 3.1% in November, coupled with an inflation rate of less than 2% in the third quarter. In the UK labor market, nominal annual wages rose 3.5% in the quarter spanning August through October, which was also comfortably ahead of inflation. During the same period last year, nominal wages increased 3.3% annually, and the unemployment rate was 0.3% higher. Both the U.S. and UK posted higher annual wage gains earlier in the year, but the increases were not substantial relative to the tight labor markets in each country during much of the year. There is no clear consensus among economists as to why wages have not risen faster during the current sustained period of low unemployment.
In the Canadian labor market, annual wage gains fluctuated sharply during 2019; in May, they were just 2.1%, rising in July to 4.6%, but falling to 3.8% in September before landing back at 4.5% in November. This rising rate of wage increases came during the same month that Canada experienced its greatest job loss since the financial crisis.
Australia
instituted the highest minimum wage law in the world on July
1, 2019, but annual wage growth continued to be sluggish; year-over-year wage
growth fell to just 2.2% in November, and Australian wage increases have been
stagnant for some time. The last time the annual rate of increase was just 1%
higher was in late 2012. And, without the robust minimum wage introduced earlier
this year, wages could have potentially grown even more slowly. With
unemployment above 5% for most of the year, analysts are not predicting
significant wage gains until the labor market improves.
Political Unrest & Devastating Fires
Massive street
demonstrations erupted in Hong Kong and in capitals around Latin America during
the closing months of 2019, leading to significant economic costs. The capitals
of Bolivia, Chile and Ecuador were roiled by anti-government protests. Specifically,
Chile – which is considered by many to be an economic success story – had a
3.4% annual retraction in its economy in October, which was triggered by its civil unrest. As a result, the
government agreed to a referendum to replace the constitution, and announced
plans for a $5.5 billion economic stimulus package.
Similarly, protests in Hong Kong intensified after months of ongoing demonstrations and led to a shutdown of the city’s airport; traffic was also disrupted and major thoroughfares turned into sites of violent confrontations. The effects of the protests on Hong Kong’s economy have been devastating. In the retail sector alone, 7,000 firms are expected to close, and many of those that survive plan to lay off employees. Moreover, the government is forecasting a contraction of 1.3% for Hong Kong’s economy in 2019 – the first annual decline since the Great Recession in 2009.
Furthermore, powerful wildfires broke out in both California and Australia, causing extensive destruction and exacting economic costs in their respective economies. Workers in Sydney and other areas close to the fires struggled with smoke-filled air and, consequently, concerns for their personal health and safety. Meanwhile, in California, fires changed the landscapes of entire communities, and power was regularly cut off as a preventive measure to keep the fires from spreading.
The relentless threat of new wildfires and the intensity of the destruction of this year’s infernos have led some to conclude that the seemingly endless potential for prosperity in the nation’s largest state is over, and that this is the end of California as we know it. The fires in both places led to dislocations and business interruptions. While political unrest will inevitably fluctuate and appear in different locations around the world, destructive fires in both the western U.S. and Australia have become the new normal, and will likely continue to be a factor in the affected regions in the years to come.
