By Hannah Erin Lang
About three-quarters of last year's job gains came in three industries. This is affecting workers' perceptions of the labor market and raising concerns of a sharp slowdown in the future.
When Jenny Lustig was laid off from her job at a health technology company in December, she didn't bother looking for another one.
As a recruiter, Lustig had "a front-row seat" to the job market in her industry, she said, and knew how sharply it had changed in recent years.
In 2022, it had been searching for candidates to fill open positions and reviewing, in some cases, as few as five applicants. Late last year, one of the last positions Lustig helped fill โ a highly technical software job โ received more than 25,000 applications.
"Things have done a complete 180," said Lustig, who opted to start his own business rather than apply for positions at other companies. "The odds are against you."
By traditional measures, the U.S. labor market is remarkably strong. The economy added more than three million jobs in 2023 and the unemployment rate has remained below 4% for two years, a feat last achieved in the 1960s.
However, most of those gains are concentrated in a few sectors of the economy, while other industries have slowed hiring or even lost jobs.
Last year, nearly three-quarters of the jobs created in the United States were in three industries: government, health care, and hotels and restaurants, according to a MarketWatch analysis of Labor Department data.
That trend has continued this year, with 73% of February's job growth occurring in those industries.
This worries some economists and confuses workers, whose experience in the labor market can look profoundly different depending on the industry in which they work.
Employees in growing industries, such as healthcare or hospitality, can still change jobs, get raises, and enjoy the historic levels of job security that most workers saw in the initial period of economic recovery from the pandemic. COVID-19.
In other sectors, workers - including many in white-collar positions - face shrinking job offers, slower hiring and a nascent fear of layoffs.
For some Americans, that is deepening the disconnect between a good theoretical economy and their more pessimistic view of it, even as the Biden administration works to convince them of the country's economic health ahead of the November election.
"It seems that [job cuts are] "This new trend is here to stay," Lustig said. "I think we're seeing a lot of people who are really scared about what the market holds for the future."
Where is the economy generating jobs?
The steady rise in employment in 2023 surprised many economists. But a deeper look shows that a few industries have been driving much of the labor market.
"That's unusual and not what you would necessarily associate with a strong and vibrant U.S. economy," said James Knightley, chief international economist at Dutch bank ING. "Insinuates that the headline [numbers] "It may seem very strong, but the underlying details seem less positive."
Two of those sectors - healthcare and leisure and hospitality - are still shoring up staffing levels that were depleted by the pandemic, Knightley said, suggesting the current aggressive pace of hiring may not be sustainable.
The rate of workers leaving their jobs has also dropped sharply through the end of 2023, he added, suggesting that for many workers, the jobs available are not as attractive.
"At first glance, the headline numbers seem fantastic," he said. "When you look at the composition, it paints a less rosy picture."
Some sectors are still hiring quickly
For employees in those still-growing sectors, little has changed since the job market was red-hot two years ago.
Sara Hadlock, a certified nursing assistant in Salem, Oregon, recently left her full-time job at an assisted living facility for the deaf and blind and now works for Express Healthcare Professionals, a healthcare staffing agency.
Contract work โ picking up shifts here and there at different medical centers in her area โ offers more flexibility and pays better than her full-time job, she said. This is because many healthcare providers in the area are still short-staffed.
At his old job, Hadlock had more responsibilities and earned about $20 an hour. Working for Express Healthcare Professionals, she said, her hourly wage exceeds $30.
"I was almost shocked at the difference," Hadlock, who is deaf, said through an interpreter.
Healthcare is not the only sector where employers continue to strengthen staff and increase salaries. In the hotel sector, hotels will pay $123 billion in compensation this year, 20% more than in 2019, the Wall Street Journal reported. Many owners have had to cut back on guest services or housekeeping due to staff shortages.
"There are a lot of jobs. A lot," Hadlock said of his industry. "The question is: where are the people?"
Are many workers being laid off?
Elsewhere in the economy, a growing number of workers - especially those in traditional white-collar jobs - are increasingly concerned about job cuts.
In February, Glassdoor's employee confidence index fell to the lowest level since the job search site began collecting data in 2016, with only 45.1% of employees reporting a positive six-month business outlook .
Concern about the layoffs is spreading among users of the site. Across all industries, mentions of job cuts in company reviews posted on the site increased 20% over the past year and have more than doubled since 2022.
"Overall, I think the labor market is colder than it was a year ago, and that's being reflected in how job seekers are experiencing the market," said Daniel Zhao, chief economist at Glassdoor. "I think many workers are settling into their current positions and prioritizing job security."
Consumer confidence figures also show greater pessimism about the chances of finding a new job. Last February, 52% of respondents said jobs were plentiful. This year, that figure fell to 41.3%.
Despite concerns about cuts, the number of layoffs across the economy has remained relatively low and is still below pre-pandemic levels as a percentage of the workforce.
High-profile layoffs that have made headlines, such as those announced by Nike, Snap and Google in recent months, are likely contributing to those anxieties, Zhao said, although those job cuts may not reflect the job market at large. general. .
It's also possible that, after a labor market that was hot for so long during the pandemic recovery, even a return to what was once the status quo could look like a bad market for workers, he said.
"Employees see it as harder to find a job and interpret that as a weaker labor market," Zhao said, "although this could be a labor market that is closer to normal after several years of very aggressive hiring."
That's what has happened in the tech sector, where, despite many well-publicized cuts, employee numbers remain higher than before the pandemic.
But that fact is unlikely to change many workers' perceptions, Zhao added.
"To some extent, the data doesn't matter," he said. "Regardless of what the hard data says, people are going to feel the way they are going to feel."
Will unemployment increase soon?
Last year's weak job growth isn't the only part of the labor market giving economists pause.
The resignation rate, or the percentage of workers who voluntarily leave their jobs, fell below pre-pandemic levels in February, a sign of a weaker labor market.
And for those who lose their jobs, it seems to take longer to find a new one. The number of continuing claims for unemployment benefits rose to 1.91 million in February, just above the level just before the pandemic.
ING economist Knightley also noted that the final months of 2023 saw an increase in part-time employment levels, while full-time employment fell.
The unemployment rate rose to 3.9% in February, according to the latest jobs report released Friday. That's the highest level in more than a year.
Rising unemployment could slow economic growth and weaken the American consumer, whose recent robust spending has been underpinned by stable wages, experts have said.
Many Americans have burned through their savings and racked up credit card debt, which could put them in a difficult situation if job losses become widespread.
Other economists point out that, as with trends like inflation, Americans' discordant perceptions do not negate the reassuring data.
"The labor market is not collapsing," said Gregor Jarosch, an economist at Duke University. "It seems like a lot of the losses right now are concentrated in a few sectors, and maybe [it's just that] "Those people are particularly loud about it."
That doesn't change Lustig's bleak outlook on his own job prospects. He has chosen to leave the corporate world behind and has instead started a weekly newsletter and content brand that he has dubbed "Layoff Lemonade."
Lustig hopes to help other workers cope with the job losses that, at least from his perspective, seem to be part of the new normal.
"I feel like companies are trying to do more things with fewer people," he said. "I don't expect this to change anytime soon."
Jeffry Bartash contributed.
-Hannah Erin Lang
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03-09-24 1228ET
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