August Jobs Report: Labor Rebalancing Continues as Job Gains Ease

The August jobs report released by the U.S Bureau of Labor Statistics on Friday revealed that the U.S. economy added 187,000 in August—the same number reported for July—and slightly above predictions. (June and July’s jobs numbers were actually revised by 110,000 fewer jobs, meaning the labor market was a bit cooler than previously reported.)

Other labor market data to note from the August report include:

• Job openings dropped 300,000 from the previous month to around 8.8 million. That’s the lowest number since March 2021. (Reuters says, “the economy needs to create roughly 100,000 jobs per month to keep up with the increase in the working age population.”)
• Voluntary quit rates dropped to 2.3 percent, the lowest number since January 2021. This number is in line with pre-pandemic levels.
• Unemployment rose from 3.5 to 3.8 percent, but many believe the increase came in part from the closure of a large trucking company.
• Private employers added 177,000 jobs in August, down from the more than 300,000 jobs added in the private sector. ADP says this slow down came largely from the leisure and hospitality industry. (On the other hand, the BLS reported the industry at large gained around 40,000 jobs.)
• At the same time, Yelp reported that the total number of business openings are expected to reach an all-time high this year, especially among minority-owned business. Many of these business openings are in leisure, home services, events, and automotive.
• Average hourly earnings rose 0.2% month-over-month and sits at 4.3% year-over-year. Both numbers are slowdowns from July’s reported numbers.
  The average work week increased by 0.1 hours, up to 34.4 hour in August.

These numbers represent a tightening labor market, which the Federal Reserve reportedly wants—alongside higher interest rates—to help bring inflation down.

“The rebalancing of the labor market has continued over the past year but remains incomplete,” Federal Reserve chairman Jerome Powell said in remarks last week. Related to the labor market and the economy, Powell mentioned four key areas the Federal Reserve pays attention to:

• Prime labor force participation—percentage of people aged 25 to 54 who are working
• Job openings
• Payroll job growth
• Total hours worked

“We expect this labor market rebalancing to continue,” Powell said. “Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response,” meaning that if job and wage gains start to spike again, the Federal Reserve could continue to raise interest rates. The Fed will use data from the August jobs report to inform their next course of action.

So, Where’s the Recession?

Since the Federal Reserve started raising interest rates at a historic clip in early 2022, companies, economists, and employees have all wondered—and tried to predict—when a recession might occur.

Many experts expected the U.S. economy could enter a recession by the end of 2023, but the current thinking by some economists is that the numbers have raised some questions if it will. That includes expected growth of the nation’s GDP over the second half of the year—often seen as a key indicator.

Insight Global surveyed workers about their feelings around a recession in June 2022, finding that four-in-five employees were worried about their job security should a recession come. Our November 2022 follow-up survey found that three in five employees would be willing to take a pay cut to keep their job. Employees have been reasonably worried for well over a year now, waiting for a recession that hasn’t happened yet according to the data. (The August jobs report didn’t add any fuel to the recession fire, either.)

So, where is the recession, and will one happen?

If the experts could guarantee our economic futures, the world might be a very different place. Predictions for a recession are far lower now than they were in 2022, though they’re not at zero. (They’ll never be at zero, but economists want to get as close to zero as possible.) If there will be one, many predict it won’t happen now until 2024.

But whether a recession happens this year, next year, or doesn’t happen at all, there are a couple things to keep in mind, both as an employer and an employee:

• Focus on upskilling: This will help employees hone their current skill set—and learn new skills—and it will help employers who offer upskilling opportunities a way to show their employees their investment in them. (And what better way to ease employees’ fears than by investing in them?)
• Find ways to stand out: Employees can make efforts to stand out among their peers or other job seekers, and employers can find ways to stand out among competition.
• What does your best work environment look like?: Remote work became more of the norm among white-collar jobs the last couple of years. It can be great for many employees and employers (even with mixed productivity numbers emerging). But workplace dynamics have been evolving over the last year to focus on a hybrid work model. Some employees naturally prefer remote work options—but might consider some of the benefits of in-person work, including natural training opportunities, improved connection and collaboration, and a higher level of trust. And if you’re looking for a job, being willing to go into an office may both narrow your competition and set you apart from other candidates.