The 2022 Labor Market: Where We Are & Where It's Going
January 20, 2022
New year, new labor market? While this isn’t exactly the case, the employment market does appear to be developing some consistency with new trends, and, due to the shift in behavior that has accelerated over the last two years, a new era in the labor market has emerged.
Where are we now, by the numbers?
Hiring slowed significantly at the end of 2021, even as the U.S. remains millions of jobs short of pre-pandemic levels. The economy added just 199,000 jobs in December, down from 249,000 in November.
However, those seeking job opportunities have ample prospects, which pushed the unemployment rate to 3.9% by year-end. For those in the “prime-age” bracket (ages 25-54), the employment rate rose to 79% and is expected to hit its pre-pandemic level in May, per Indeed.
Concurrently, wages continue to surge—0.6 percent in December and 4.7 percent on the year, driven by high competition among employers. According to Indeed, job postings across all wage tiers are well above pre-pandemic baselines, and since the Delta surge in summer 2021, low-wage job postings have significantly lagged behind middle and high-wage job postings.
Looked at holistically, these data indicate that there is a dearth of available workers, fueled in large part by the millions who have left the work force for early retirement, health concerns, and child care challenges (discussed in our last article). Currently, there are approximately 6 million less people employed now than at the height of employment in late 2019.
Another element to consider is that many of the above-referenced numbers were recorded just prior to the Omicron variant spreading significantly. This Covid variant is likely to impact the labor numbers and create challenges throughout January and February. Many businesses have indefinitely postponed return-to-office plans as cases have risen, some schools have returned to remote learning, and related businesses have continued to see drop-off in candidate volume as a result.
“We’re all sort of at the whims of these variants and surges in cases, and it’s hard to know when they might strike,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “Any sort of projections or outlook on the pace of gains over the next year or so is still dependent on the virus.”
Where do employers go from here?
Companies will continue to need to raise wages to “bid” for employees in short supply, and these higher and continually increasing wages should be considered the new post-pandemic norm. Participation in the labor force remains depressed compared to pre-pandemic, but studies indicate greater compensation and ample opportunities have begun to lure some people back into the job market in the last two months.
But the answer can’t simply be “spend more money.” Employers need to be more effective and innovative in their talent acquisition efforts, and that means evolving some longstanding processes. As personnel costs continue to rise to gain and retain talent, not just in wages but also in recruitment and marketing efforts to acquire them, we are going to dedicate our next few articles to things you can do to better attract quality candidates that cost little to no money but can have a significant impact on your recruiting. They do take some of your HR teams’ time, or if you choose to partner with Source2, we’ll handle them for you and get you set up for success.
Source2 has decades of experience in recruiting, as well as success in the current market, and we can help with wage analysis, brand positioning, and recruiting on the right channels with the right content to help find the employees businesses on the front line need. We hope you find our upcoming content useful, but we encourage you to connect with us for a conversation now about your specific needs by emailing email@example.com.