Workers are sour on the job market — but it may not be warranted

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Workers are sour on the job market — but that pessimism may be considerably misplaced.

The Glassdoor Employee Confidence Index in January fell to its lowest stage since 2016, when the profession website started monitoring the metric, it stated Monday. The index measures how employees really feel about their employer’s six-month enterprise outlook.

The decline suggests job safety is a “distinguished” fear, stated Daniel Zhao, lead economist at Glassdoor. “It’s a sign that workers are involved heading into 2024,” he stated.

Layoff headlines masks ‘very sturdy’ job market

That deterioration is probably going attributable to a wave of layoff bulletins in latest weeks, Zhao stated.

So far in 2024, for instance, massive expertise corporations together with Amazon, eBay, Google and Microsoft have announced job cuts. But it’s not simply tech. Others comparable to BlackRock, Citigroup and Universal Music Group additionally introduced layoffs.

U.S.-based corporations deliberate about 722,000 job cuts in 2023, virtually double these introduced in 2022, according to Challenger, Gray & Christmas, an outplacement and government teaching agency.

However, these latest headlines masks energy in the general job market, economists stated.

From a employee’s perspective, issues “do not get any higher,” stated Mark Zandi, chief economist at Moody’s Analytics.

Despite pockets of layoffs in sure industries comparable to tech, Zandi stated job cuts throughout the broad U.S. labor market proceed to hover close to historic lows, the place they’ve been since spring 2021.

New claims for unemployment insurance coverage are in step with their pre-pandemic pattern in 2019, which economists describe as a interval of labor market energy. The unemployment charge has additionally been below 4% for 2 years.

Indeed, when it involves the common annual unemployment charge, 2023 was the sixth-best 12 months on document, rating solely behind a couple of years in the Nineteen Fifties and Sixties, stated Julia Pollak, chief economist at ZipRecruiter.

“It’s nonetheless a really sturdy and resilient labor market general,” Pollak stated.

Outlook relies upon on your reference level

While the Glassdoor index reveals deteriorating confidence, different measures sign a rosier view about the job market and U.S. financial system.

For instance, shopper sentiment jumped 13% in January to its highest stage since July 2021, according to the University of Michigan. Similarly, a Conference Board poll additionally discovered that shopper optimism strengthened in December throughout all ages and family earnings ranges.

Housing values and inventory costs are at document highs and, in relative phrases, “everybody’s obtained a job,” Zandi stated.

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ZipRecruiter’s Job Seeker Confidence Index additionally rose in the final two quarters of 2023, although it stays under early 2022.

Overall employee sentiment seemingly relies upon on their reference level, Pollak stated.

For instance, if employees are evaluating outcomes relative to what was anticipated to occur in 2023 — a 12 months wherein many economists had expected the U.S. to tip into recession — then the latest job market appears to be like like “a miracle,” Pollak stated.

However, employees are extra apt to check their present outlook to that of a 12 months or two in the past, a time when the job market was red hot and employees had document leverage to get higher jobs and better pay. Since then, “issues have undoubtedly cooled and slowed,” Pollak stated.

The one ‘blemish’ in the U.S. financial system

The Federal Reserve raised borrowing prices aggressively to cool the economy and labor market to finally tame persistently excessive inflation.

The inflation charge has decreased significantly from its pandemic-era peak. But the inflationary episode has left shopper prices noticeably more expensive, particularly for staples comparable to meals and lease, economists stated.

“The solely [economic] blemish — and it’s an enormous blemish — is costs are a lot larger than they had been two to a few years in the past,” Zandi stated.

High pandemic-era inflation eroded shopping for energy for the common individual in consecutive months for greater than two years. While wage development was traditionally excessive, employees’ paychecks purchased much less.

But that pattern has reversed: Wage development now surpasses the charge of inflation for the common individual, that means employees’ paychecks are rising once more relative to the issues they purchase. If that pattern holds, shopper confidence ought to steadily rebound, Zandi stated.

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