The latest data from the U.S. Bureau of Labor Statistics (BLS) was released this week. This included the JOLTS (Job Openings and Labor Turnover Summary) data on Wednesday, and The Employment Situation report on Friday. The JOLTS data is current through November (preliminary), while the employment data is for December (preliminary).
The headline? The labor market overall—even with all of the efforts by the Fed to cool the economy and curb inflation—remains tight. The number of jobs added in December came in at 223,000, which was slightly below the previous four months, but above analysts’ expectations. And importantly the unemployment rate ticked down from 3.7% to 3.5%. In addition to those numbers, the data from the JOLTS report earlier this week provides even more evidence that the labor market remains tight.
What does the latest data say?
Overall, while the numbers reported this week continue to be off the peaks from late 2021 / early 2022, they remain at historically high levels. Let’s look at four components: job opportunities, hiring, quit rate, and layoffs. (Charts Source: US Bureau of Labor Statistics)
- While there is now a three-month trend downward, the decreases in available opportunities are slight—10.687 million openings in September, to 10.512 million in October, to 10,458 million in October.
- Since the economy has grown over time, what matters even more is the rate, as that relativizes the raw numbers to the overall size of the economy. And in this regard, the small change above wasn’t enough to alter the rate, which held steady at 6.4.
- As noted by CNBC, open positions continue to outnumber available workers by about 1.7 to 1, which speaks to both the tight labor market and a continued skills mismatch for many industries and roles.
After increasing slightly in October, total hires ticked down a bit in November. No doubt many organizations are slow-playing their hiring plans as they play wait-and-see regarding the overall economy, demand in their particular sector, etc. The hiring rate has clearly been decreasing since its peaks in late 2021 and early 2022, but remains at the same level it was at the end of 2019 and early 2020, before the pandemic, during a period when the U.S. economy was considered to still be in slow-growth mode.
Leaving aside the phenomenon of quiet quitting, we continue to see strong rates of actual job quitting. In fact, the preliminary reading for quits in November shows an increase over the September and October levels, nearly on par with August’s level. The quit rate at 2.7% has essentially been unchanged from July through November of 2022, and is a mere three-tenths of a percent below the all-time high of 3.0% seen in November and December of 2021. As shown at right, that quit rate remains far above any month from 2001-2021.
Layoffs and Discharges
There continues to be some high-profile announcements of layoffs, e.g., from the tech sector like Amazon and Salesforce, and elsewhere. So perhaps the December and January numbers, when available, will begin to paint a different picture. But total layoffs and discharges in November were in the same general range that we’ve seen each month of 2022, and were actually lower than in October (1.35 million vs. 1.445 million). The layoffs and discharges rate remained at 0.9% in November—essentially the same rounded number it has been all of this year, and lower than any year from 2001-2021.
HR Leaders Have Aligned their 2023 Priorities to this Ongoing Talent Imperative
These latest numbers, in addition to other factors, are leading many analysts to the conclusion that the labor shortage is not temporary, and it will continue with or without a recession.
So, what are HR leaders doing in the face of this reality, as we begin the new year?
This question was part of what i4cp sought to answer when we recently surveyed over 120 members of our six Boards, which include Chief Human Resources Officers, Chief Learning and Talent Officers, Chief Diversity Officers, and heads of Talent Acquisition, Total Rewards, and People Analytics.
These boards are i4cp’s exclusive peer groups of senior executives who collaborate to explore next practices, build evidence-based solutions to critical talent challenges, and drive their respective functions into the future.
As we do annually, we ask members of each board to share their top four priorities for the coming year, as well as predictions for their respective functions. All of this wisdom and more is available in our 2023 Priorities and Predictions report. While some of the priorities understandably vary given the different functional areas represented by the boards, a clear priority shared by all is leveraging best and next practices to continue to address the ongoing talent imperative represented by the tight labor market numbers above. Here are some of the priorities focused on this challenge:
- Culture renovation. A top focus for CHRO Board members for 2023 is refocusing the employee value proposition (EVP) and reinforcing it via a continually renovated culture. Savvy leaders are recognizing that work has been forever altered, and so have employee expectations. The organizations’ EVP therefore needs to resonate strongly and the health of the organization’s culture is critical, so many CHROs are continuing to review and renovate policies, procedures, and practices that have defined their cultures. See CultureRenovation.com to learn more about i4cp’s research in this area.
- Learning cultures. Chief Learning and Talent Officers are also focused in 2023 on culture—in particular creating a culture of learning that enables stronger upskilling where needed. Along with hiring and internal mobility, upskilling is a critical strategy to leverage in the face of ongoing tight labor markets that can exacerbate skill and capability gaps in an organization. Unfortunately, i4cp’s research has found that only 12% of those we surveyed perceive their organizations’ upskilling programs as highly effective.
- Inclusive cultures. Not surprisingly, all of the CDO board members we surveyed cited aspects of diversity recruitment, retention, and development as priorities in 2023. Skilled, diverse talent is at a premium and job seekers have options, even as economic conditions trim expansion plans for some companies. One approach many diversity leaders are taking is building more inclusive cultures as part of the overall employee value proposition, with specifics ranging from shoring up listening strategies to encourage greater psychological safety; expanding ERG / BRG offerings with a more strategic focus; and providing training to enhance inclusivity in the culture, often particularly aimed at leadership.
- Workforce planning. Aligned with the latest BLS data and the talent imperative, people analytics leaders told us that an increased area of focus in 2023 will be enhancing their organization’s workforce planning capabilities. Leaders need to more quickly move from data to insights to action when it comes to hiring and retention, especially for top talent and roles that involve hard-to-find skills. Analysts are more often leveraging predictive analytics to understand what skills will be needed, what the labor market will yield, and what can be developed internally.
- Building capacity. Given the ongoing talent scarcity for hard to recruit roles, operational effectiveness of talent acquisition is critical. Many TA leaders told us that transforming how their function is structured and performed—from the basics of recruiting and selection to the strategic attraction and engagement of talent pools—is a priority in 2023. In particular, some TA board members are looking at their operating models and pondering new frameworks that could better equip their function to sense and respond quickly to shifts in the market. This involves scrutiny of foundational systems, data collection, and reporting to confirm that TA is set up to consistently attract and hire talent with the skills and capabilities necessary to meet business objectives now and well into the future.
- Holistic well-being. Total Rewards leaders told us they will respond to the ongoing tight labor market in 2023 by staying focused on what is valuable to both candidates and employees, including the latest trends in compensation, bonuses, recognition, workplace flexibility, and career development opportunities. Clearly, staying competitive in the war for talent is not only about compensation, so a focus for these leaders is recognizing that individuals’ holistic well-being is integral to their abilities to accomplish goals and drive workplace innovation. In some cases, this simply means following through on groundwork total rewards leaders have laid already, while in others new well-being solutions, often especially those focused on mental and financial well-being, will be needed to help prevent burnout, build resiliency, and establish a sense of security.
All of these priorities and many more are detailed in i4cp's 2023 Priorities and Predictions report. Also included are insights from select board members—and other industry thought leaders, such as Sanyin Siang, Marshall Goldsmith, and John Boudreau—about what organizations’ top priorities are going into 2023.