Job boom, meet candidate scarcity.
U.S. employers added jobs at a pace not seen since July 2021. Despite the potential pressures of Omicron, the economy saw 678,000 jobs added. This is over 50% higher than the expected number of 423,000 that economists had largely predicted. It also includes an upwardly revised 481,000 in January, adding 14,000 jobs to the initial reported total.
For context, prior to the pandemic, the average monthly jobs gain was 164,000.
This comes as the unemployment rate plummets to 3.8% vs. the 3.9% expected, after 4.0% in January.
The latest jobs data follows recent reports that have shown an economy maintaining strength as new COVID infections have plummeted since late January. Consumer spending has risen, spurred by higher wages and savings. Restaurant traffic has regained pre-pandemic levels, hotel reservations are up, and far more Americans are flying than at the height of Omicron.
There are benefits to employees with the current trends. Talent is in short supply, pressuring employer to increase wages and benefits. The average hourly income is up 5.1% over the past 12 months. Employers are showing more flexibility with work-from-home options. Aggressive recruiting tactics now routinely included beefed up employee referral bonuses and other incentives.
“The labor market continues to be quite hot,” said Nick Bunker, an economist at Indeed. “It looks like the labor market is still primed for lots of strong employment growth.”
That said, wage gains were weak in February, ticking The consumer price index (CPI) is up 7.5% over the same period, and the coming months seem poised to maintain pressure on employers to at least catch up to the CPI or risk losing valuable workers at a time of talent-scarcity.
"With the Omicron wave receding rapidly, the labor market has unlocked faster jobs growth. Additionally, employer demand for workers exceeds labor supply significantly, which is likely to keep jobs growth healthy even if demand slows amid disruptions from the war in Ukraine and rising interest rates in coming months," added Daniel Zhao, senior economist at Glassdoor.
The risk here is that the labor market could be approaching - or perhaps is at or beyond - the level of employment that can persist under our current economic models without stoking stronger inflation.
Either situation high - job numbers or low unemployment - would be challenging for recruiters or hiring managers to navigate. The concurrence puts an unusual, and potentially challenging, tension into the economy. Employers are pressured to increase salaries and benefit openings, whilst also adapting recruiting processes and - in some cases - standards. Companies whose business models rely on low-wage, high stress jobs in hospitality, construction, call center, and other categories will likely see challenges to their capacity to survive, let alone thrive.
With reports that candidates are increasingly unhappy with how talent teams are treating them, and candidate experience overall is slipping rapidly, all of these efforts to sweeten the pot may be in vain. Decades of inertia from employers who often paid lip service - at best - to investing in better processes, technologies, and supporting a hiring-focused culture are coming home to roost.
Related: Fixing the Disconnect Between Candidates and Process to Mitigate Ripples in the Talent Supply Chain
We will get another factor on this churn when we add the upcoming Job Openings and Labor Turnover Survey (JOLTS) data to the mix, which is due out on March 9th. JOLTS reports on how many job openings there are each month, how many workers were hired, how many quit their job, how many were laid off, and how many experienced other separations.