Introduction

Welcome back to Recruiting Realities! In this episode, Yazad Dalal, Chief Growth Officer at Joveo, sits down with our in-house labor market economist, David Garrett, to unpack the latest US jobs report for May 2024. Together, they explore the headlines behind the numbers – from record-high labor force participation among prime working-age women to the bifurcated economy’s impact on various sectors. Whether you’re intrigued by macroeconomic shifts or seeking actionable insights on recruitment trends, this discussion offers something for everyone.

Yazad Dalal: Hi everyone, I’m Yazad Dalal, Chief Growth Officer here at Joveo, and welcome to Recruiting Realities, where we bring to you the latest developments and insights in recruitment. Today, we’re talking to our own in-house labor market economist, David Garrett, about the US jobs report for May 2024. Hello, David!

David Garrett: Hey Yaz, how are you doing? Glad to be here.

Yazad Dalal: I’m good too. David, the most recent US jobs report came out. There were some pretty big headlines as usual. Some said it was a strong report, like the Chicago Fed Chair. Some said it was weak because the report showed that wage growth had slowed. But the market did pop the day it came out. I was excited to see that labor force participation of prime working-age women is now at a record high, so that’s pretty cool.

I have a bunch of questions for you, but before we get started, for our listeners, at Joveo, we publish Interactive Insights across all major occupations in the US. We’d love for you to check them out on our website, joveo.com/interactive-insights. 

David, let’s go ahead and get started. Tell me, what were some of the key highlights that you saw in the May ‘24 BLS jobs report?

David Garrett: Yeah, so the report focused on April. It saw the creation of 175,000 new jobs, which was actually below what most people expected, which is, you know, a very good sign for slower econ growth as the Fed has been looking for. It was also, I believe, the slowest month of job growth for about the past year from what I recall.

There were also revisions to previous months. So, you know, February and March actually were lower than we originally reported, which again falls in line with what we’re trying to see with slower economic growth.

Yazad Dalal: And tell me a little bit about the overall changes in the unemployment rate, specifically for April, and what you think contributed to those changes.

David Garrett: Yeah, so the unemployment rate for the past 3 months has remained relatively stable, roughly between 3.8% and 3.9%. It’s mostly being contributed by things like healthcare and social assistance, which we’ve seen consistent increases for, consistent demand for. But also declines in areas like manufacturing, which have been heavily impacted by the held high interest rates by the Fed.

There’s also a lot of change in the way people are going between companies. A lot of companies and people are hanging on to each other, so they’re not leaving. We’re kind of seeing a reversal of The Great Resignation, as a lot of people refer to it. So, quits and hires have remained stalled, which means that the number of employed Americans has remained stable. Many people who are also unemployed are not experiencing long periods of unemployment, which shows that there’s also still a lot of jobs available for those who are looking.

Yazad Dalal: Gotcha. You mentioned that The Great Resignation is over, but lots of companies have also announced pretty significant layoffs. What sectors do you see being most affected by those layoffs? What are the potential long-term impacts on the overall labor market?

David Garrett: Yeah, as we’re all probably very publicly aware, there’s a lot of visibility on places like Tesla and other major tech companies, or like Google, that have been doing layoffs. Even some finance, like Deloitte doing layoffs recently, which many of them are attributing this to restructuring, cost-cutting measures, AI, you know, it’s kind of a little bit all over the place there.

But the long-term impacts, which could be more significant, include just a surplus of highly skilled white-collar workers, which is going to increase job competition in those areas, slowing down wage growth, and potentially resulting in some leaving the sector by finding jobs in other areas of the economy.

Yazad Dalal: I know that where my sister lives out in Silicon Valley, they’ve had, I think, 80,000 people laid off over the past several months. Obviously, that’s a huge impact in that particular market. But then in other industries, we’re seeing job gains. And so, in your opinion, what does that kind of indicate about the overall state of the economy?

David Garrett: Yeah, we’re kind of seeing somewhat of a bifurcated economy. You know, so like things like healthcare, social assistance, education, government, those are all very acyclical so they don’t follow changes and slowdowns of the business cycle, which, you know, places like tech jobs and other sort of more standard business companies are going to be much more sensitive to it. To me, it does tell me that, you know, as I mentioned before, the economy is slowing down in line with what the Fed has been looking for to curb inflation.

Yazad Dalal: Gotcha. And then I’m thinking also about some of the big legislative policies that have been passed over the past few years and what sort of impact they’re having. I’m thinking about the CHIP grants, which were mainly aimed at fueling overall industry growth in the tech sector and in manufacturing. What impact have we seen from those policies in tech and manufacturing?

David Garrett: Yeah, so CHIP in particular, it will provide a pretty significant boost to technology and manufacturing, but also things like construction. I think it’s expected, from what I’ve seen, the latest numbers were around 56,000 jobs in the semiconductor ecosystem alone, which is one piece, but also roughly 33,000 manufacturing jobs, 75,000 construction jobs, all over the next decade or two, which definitely provides a boost to the wages and employment opportunities for these sectors, particularly as they’re more sensitive to economic slowdowns.

Yazad Dalal: Gotcha. I’m excited about it because I grew up in the Hudson Valley in New York, which was IBM chip manufacturing country, and my dad worked there for 30 years doing that kind of work. So I’m happy to see, especially in that part of New York, a lot of employers coming back, Taiwan Semiconductor, Global Foundry, and a bunch of others.

And then, just thinking about the broader implications of some of the government policy innovations on job creation, on economic stability, can you share a little bit more about that?

David Garrett: Yeah, so, I mean, this is the less fun part about econ, I would say, about macro econ in particular. It’s going into the way things like government policies, whether they’re fiscal, regulatory, trade, you know, and how they play a role in the creation and economic stability of jobs.

So the Fed’s current monetary policy of raising interest rates and holding them high is definitely, you know, it serves this goal, you know, it’s the primary tool they use for slowing inflation. But at the same time, the negative consequences by making it so much more costly to borrow money, it reduces opportunities for companies to grow, slows hiring rates, which can lead to layoffs.

And, you know, on the other side of things, you’re seeing sort of expansionary fiscal policy, like you mentioned with CHIPS or the Build Back Better policies as well, which are trying to counteract that slowdown that occurs from high interest rates through directly creating need for jobs in key industries or ones that have long-term impact, such as construction. It’s kind of a way to counterbalance the sort of negatives that we see with the fiscal and monetary policy that we’ve been undergoing.

Conclusion

That’s it for this episode of Recruiting Realities! From legislative boosts like the CHIPS Act to navigating the nuanced impacts of layoffs and job gains, David and Yaz shed light on the complexities shaping today’s labor market. Stay ahead by exploring our interactive insights reports. Thanks for tuning in, and we’ll catch you next time!