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Indications of a labor market less skewed to the employee’s favor and more to the employer’s are appearing:
- The US Total Nonfarm Job Openings 12MMA is declining off a mid-2022 record high (the data series dates back to the early 2000s).
- US Overall Annual Wage Growth is declining off a third-quarter-2022 record high (the data series dates back to the late 1990s). The current Wage Growth of 5.3% is still a problem regarding profitability, but it is down from a 6.7% peak.
In tandem, these trends suggest that companies are enjoying a small measure of easing in the pressures they have been contending with in order to retain their employees. Decline in Job Openings means fewer “greener pastures” for your employees to depart for. Lower wage growth means less pressure to raise salaries. But employers are not relaxing too much:
- Despite the decline, the Job Openings 12MMA, at 10.1 million, is still at more than double the pre-COVID-shutdowns 10-year average.
- Annual Wage Growth is still at nearly double the pre-COVID-shutdowns 10-year average.
While Job Openings and Wage Growth are still elevated, our expectations for industrial sector and macroeconomic decline in 2024 suggest that these metrics will decrease further, potentially easing companies’ worries on one front while they contend with diminished revenue potential and the other pressures that accompany staying fully engaged in a declining economy.
As you assess your company’s labor-related pressures, do not neglect to take locale into consideration. Wage growth trends vary by US region:
- Mountain region states are posting the highest rate of annual wage growth: 7.1% as of August.
- Collectively, Texas at and the states bordering it to the north and east, including Arkansas, Louisiana, and Oklahoma, have the lowest rate of annual wage growth, at 5.1%.
For job openings:
- The rate of decline has been the most pronounced in the Northeast, with a 12/12 rate-of-change of -16.4%% and the mildest in the South, at -7.9%.
As you assess the employment situation and its impacts on your company, you can follow the media and its emotional presentation of the Bureau of Labor Statistics’ monthly jobs report. However, a better choice is to follow ITR Economics as we impartially assess the data and lay out our expectations for the years to come. Our Trends Report™ offers monthly insights on the job market as well as our forecast for US Private Sector Employment.