Techno Blender
Digitally Yours.

Robust Job and Wage Growth Showed Signs of Cooling in Late 2022

0 63



The labor market proved to be a resilient stabilizer in 2022 for a U.S. economy facing the highest inflation in four decades.

With the Federal Reserve having raised interest rates at the fastest pace since the early 1980s to fight inflation, however, the economy has slowed, and effects of that are filtering into hiring and wages.

The unemployment rate was 3.7% in November, according to the Labor Department, just above half-century lows matched earlier in 2022. Fed officials forecast the rate to rise to 4.6% in the fourth quarter of 2023, in economic projections released in December.

Here is what underpinned the labor market’s resilience in 2022, and what lies ahead in 2023.

U.S. employers added an average of 392,000 jobs a month in 2022 through November, according to Labor Department figures. While slower than in 2021, the hiring pace was more than double that of 2019, the year before the pandemic began.

Gains were led by the leisure and hospitality sector, which includes restaurants, hotels and tourist attractions. The industry accounted for about one in five net jobs added in the first 11 months of 2022. Job gains were also strong in other service sectors. 

“Workers at the lower end of the income distribution in areas like leisure and hospitality, transportation, and retail did particularly well,” said

Aneta Markowska,

chief financial economist at Jefferies. “Demand for services was just enormous.”

The pace of hiring cooled in the second half of 2022, and several large employers laid off workers or planned to cut jobs, including

Goldman Sachs Group Inc.,

Meta Platforms Inc.

and

Amazon.com Inc.

While those moves didn’t result in an increase in broad layoff figures in late 2022, economists surveyed in the fall by The Wall Street Journal forecast employers to start shedding jobs in 2023.

Wages grew at a historically strong rate in 2022, though the gains failed to keep pace with inflation. Average hourly earnings for private-sector employers rose 5.1% in November, from a year earlier, while consumer prices rose 7.1% during the same period, according to the Labor Department. 

Median wages for leisure and hospitality workers advanced 7% in the 12 months ended in November, the most of any industry tracked by the Federal Reserve Bank of Atlanta. Wages in the trade and transportation and the manufacturing sectors grew more than overall pay. 

“The fastest wage growth was where there was this combination of strong demand for workers, relatively reticent labor supply and lower pay,” said

Nick Bunker,

an economist at the jobs site Indeed.

Lower-paying sectors have seen a slowdown in wage growth in recent months, Mr. Bunker said, referring to Indeed’s wage tracker, which looks at advertised wages.

That tracker showed wage growth in 82% of industries was lower in November than six months earlier. If pay changes remain on the same trajectory, wage growth will return to prepandemic levels by the second half of 2023, Mr. Bunker said.

One factor supporting wage growth in 2022 was the struggle many employers had in finding workers. 

Job openings exceeded the number of people who were unemployed and seeking work throughout 2022, according to the Labor Department, though the gap began to narrow. The labor-force participation rate, or the share of workers who are employed or seeking a job, hasn’t recovered to its prepandemic level. 

“The labor-force participation rate is likely to continue to trend down over time as the population ages,” said

Stephen Stanley,

chief economist at Amherst Pierpont Securities. 

Some of the decline in labor supply can be attributed to early retirements triggered by the pandemic. Mr. Stanley said that those who retired early aren’t likely to return to the labor force.

The participation rate for prime-age workers—those between the ages of 25 and 54—approached prepandemic levels in the summer but has edged down in recent months. The rate remains lower among workers in their early 20s.

The unemployment rate in 2022 fell to match the half-century lows set in 2019 and early 2020, just before the pandemic began. The November rate was up slightly from the 3.5% low for 2022, set in September and July.

Some private economists expect the unemployment rate to rise more than the Fed projects.

Ms. Markowska of Jefferies said she expects the unemployment rate to reach about 5% by the end of 2023 and then continue rising in the following year. Economists from Nomura forecast a 5.9% unemployment rate in late 2023. 

“Since there isn’t much upside for labor-force growth, any upward pressure on unemployment will more likely come from job losses,” said Ms. Markowska. That would “drag down consumption, impacting top-line growth negatively for a lot of businesses, which will force them to cut more costs and shed labor,” she added.

Write to Bryan Mena at [email protected]

Starbucks workers pushed for higher pay and improved staffing levels in 2022. Photo: Seth Wenig/Associated Press

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



The labor market proved to be a resilient stabilizer in 2022 for a U.S. economy facing the highest inflation in four decades.

With the Federal Reserve having raised interest rates at the fastest pace since the early 1980s to fight inflation, however, the economy has slowed, and effects of that are filtering into hiring and wages.

The unemployment rate was 3.7% in November, according to the Labor Department, just above half-century lows matched earlier in 2022. Fed officials forecast the rate to rise to 4.6% in the fourth quarter of 2023, in economic projections released in December.

Here is what underpinned the labor market’s resilience in 2022, and what lies ahead in 2023.

U.S. employers added an average of 392,000 jobs a month in 2022 through November, according to Labor Department figures. While slower than in 2021, the hiring pace was more than double that of 2019, the year before the pandemic began.

Gains were led by the leisure and hospitality sector, which includes restaurants, hotels and tourist attractions. The industry accounted for about one in five net jobs added in the first 11 months of 2022. Job gains were also strong in other service sectors. 

“Workers at the lower end of the income distribution in areas like leisure and hospitality, transportation, and retail did particularly well,” said

Aneta Markowska,

chief financial economist at Jefferies. “Demand for services was just enormous.”

The pace of hiring cooled in the second half of 2022, and several large employers laid off workers or planned to cut jobs, including

Goldman Sachs Group Inc.,

Meta Platforms Inc.

and

Amazon.com Inc.

While those moves didn’t result in an increase in broad layoff figures in late 2022, economists surveyed in the fall by The Wall Street Journal forecast employers to start shedding jobs in 2023.

Wages grew at a historically strong rate in 2022, though the gains failed to keep pace with inflation. Average hourly earnings for private-sector employers rose 5.1% in November, from a year earlier, while consumer prices rose 7.1% during the same period, according to the Labor Department. 

Median wages for leisure and hospitality workers advanced 7% in the 12 months ended in November, the most of any industry tracked by the Federal Reserve Bank of Atlanta. Wages in the trade and transportation and the manufacturing sectors grew more than overall pay. 

“The fastest wage growth was where there was this combination of strong demand for workers, relatively reticent labor supply and lower pay,” said

Nick Bunker,

an economist at the jobs site Indeed.

Lower-paying sectors have seen a slowdown in wage growth in recent months, Mr. Bunker said, referring to Indeed’s wage tracker, which looks at advertised wages.

That tracker showed wage growth in 82% of industries was lower in November than six months earlier. If pay changes remain on the same trajectory, wage growth will return to prepandemic levels by the second half of 2023, Mr. Bunker said.

One factor supporting wage growth in 2022 was the struggle many employers had in finding workers. 

Job openings exceeded the number of people who were unemployed and seeking work throughout 2022, according to the Labor Department, though the gap began to narrow. The labor-force participation rate, or the share of workers who are employed or seeking a job, hasn’t recovered to its prepandemic level. 

“The labor-force participation rate is likely to continue to trend down over time as the population ages,” said

Stephen Stanley,

chief economist at Amherst Pierpont Securities. 

Some of the decline in labor supply can be attributed to early retirements triggered by the pandemic. Mr. Stanley said that those who retired early aren’t likely to return to the labor force.

The participation rate for prime-age workers—those between the ages of 25 and 54—approached prepandemic levels in the summer but has edged down in recent months. The rate remains lower among workers in their early 20s.

The unemployment rate in 2022 fell to match the half-century lows set in 2019 and early 2020, just before the pandemic began. The November rate was up slightly from the 3.5% low for 2022, set in September and July.

Some private economists expect the unemployment rate to rise more than the Fed projects.

Ms. Markowska of Jefferies said she expects the unemployment rate to reach about 5% by the end of 2023 and then continue rising in the following year. Economists from Nomura forecast a 5.9% unemployment rate in late 2023. 

“Since there isn’t much upside for labor-force growth, any upward pressure on unemployment will more likely come from job losses,” said Ms. Markowska. That would “drag down consumption, impacting top-line growth negatively for a lot of businesses, which will force them to cut more costs and shed labor,” she added.

Write to Bryan Mena at [email protected]

Starbucks workers pushed for higher pay and improved staffing levels in 2022. Photo: Seth Wenig/Associated Press

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment