The job market is strong, economists say — but workers don’t think so


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The job market remains strong despite gradual cooling from pandemic-era highs, according to labor economists — but workers don’t seem to share that outlook.

Employee confidence fell last month to its lowest level since 2016, according to Glassdoor data. About 46% of workers reported a positive six-month outlook for their employers, down from 54% from a year ago.

Meanwhile, the ZipRecruiter Job Seeker Confidence Index was down six points in the second quarter to its lowest point since the beginning of 2022.

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The juxtaposition of a resilient labor market but deteriorating sentiment is likely due to financial stress among workers and the fact that the recent baseline was a scorching-hot job market in 2021 and 2022, economists said.

“Overall, workers still have more leverage and more job security than before the pandemic,” said Julia Pollak, chief economist at ZipRecruiter.

“I think job seekers comparing this environment to 2021 and 2022 do feel worse off,” she added. It’s harder to find a new job and the financial pressure on jobseekers is greater now. “

The job market is stable but not ‘gangbusters’

Several metrics — including job openings, quits, layoffs and the unemployment rate — suggest the labor market is healthy, economists said.

Daniel Zhao, lead economist at Glassdoor, said it is “softer but steady. “

“If you look at these indicators in aggregate, they point to a labor market that isn’t necessarily going gangbusters, but in a fairly stable state,” Zhao said.

Broadly, the indicators are largely in line or even stronger than pre-pandemic, a time when unemployment was low, people were joining the labor force and gender and racial employment gaps were narrowing, Pollak said.

I think a lot of folks are comparing the labor market today to a year or two ago when things were hot. But of course, there were also problems with the economy of 2021 and 2022.

Daniel Zhao

lead economist at Glassdoor

“That’s a very good thing,” she said.

The quits rate — a barometer of workers’ willingness or ability to leave a job — was 2.3% in August, the same as February 2020, the U.S. Department of Labor reported Tuesday.

It was unchanged from July, though down from a 3% peak in April 2022 when a record number of workers were quitting, in what became known as the great resignation.

Likewise, the hiring rate is slightly below but roughly similar to its level in February 2020.

Layoffs are still 15% lower than before the Covid-19 pandemic and job openings — a gauge of employers’ demand for workers — are 37% higher, according to Labor Department data.

The problems with the 2021, 2022 job markets

In fact, job openings rose significantly, by 690,000, to 9.6 million in August, the Labor Department reported Tuesday.

However, there are reasons to think that increase is anomalous, economists said. The data is volatile and can fluctuate wildly from one month to the next. Zhao: “I think many people are comparing today’s labor market to the one of a year ago, when everything was hot.” But there were problems in the economies of 2021 and 2022. Zhao said that certain sectors, such as technology, hired too many people. This led to the layoff of tens of thousands. Zhao says a labor market that is too hot will not last, because wage growth and job turnover are so high they fuel inflation. Zhao says it is unclear to what extent this occurred during the recent inflationary period. It’s unclear if — and to what extent — the labor market will continue cooling, economists said.