January 2024: JOLTS, jobs, and java talk November and December labor numbers

Grab a coffee and join us for 15 minutes of real-time insights on the November JOLTS report, the December jobs report, and more.

January 2024: JOLTS, jobs, and java talk November and December labor numbers

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Grab a coffee and join us for 15 minutes of real-time insights on the November JOLTS report, the December jobs report, and more with Jason Cerrato, our VP of Market Strategy and our Chief Economist, Sania Khan.

Introduction 00:00
Hello and Happy New Year. Thank you for tuning in to our January jobs talk with April AI. Our chief economist Sania Kahn and our Vice President of market strategy, Jason Serato will share real time insights on the jolts report, jobs report and other hot topics and talent today. So grab a coffee kick back and spend the next 20 or so minutes listening to what’s currently top of mind for business leaders. With that, I’ll hand it over to Jason Serato for some jolts jobs and Java.

Jason Cerrato 00:29
Thank you so much, Kali. It’s great to be back. Here we are on the other side of the holidays. And it’s still the first week of January. So I think we’re still allowed to say Happy New Year. Happy New Year, Sania.

Sania Khan 00:40
Happy New Year.

Jason Cerrato 00:44
It’s wonderful to be back. And if it’s the first Friday of the month, you know where we are. We’re here talking jobs, right?

Sania Khan 00:51
Yes, we have another exciting jobs Friday.

Jason Cerrato 00:56
So we got the jobs report this week. And the December jobs report showed that employers added 216,000 jobs for the month while the unemployment rate held at 3.7%. And that compared with respective estimates of around 170,003.8%. So once again, the surpassing estimates and overall a relatively positive morning, would you say?

Sania Khan 01:20
Yeah, um, you know, the jobs report is the labor market is staying steady, trending downward, but still staying steady. The previous two months were revised down. So November and October, were revised down by a combined 71,000 jobs. So we are cooling, the post summer was a little bit lower than we had initially assumed. But that’s okay, we’re still chugging along.

Jason Cerrato 01:58
Again, you know, a trend we’re seeing it’s a little bit of positive, a little bit of negative a little bit of happy feelings, a little bit of concern, but all in all relatively stable. So I think a lot of the conversation that I’ve heard and that we’ve been having seems to be you know, we keep chugging on. But once again, you know, we’ve talked about how the way work is getting done. And the way we’re tracking these things needs to catch up with the world of today. So as you mentioned, some of the previous month’s reports continue to be revised when they go back and actually look at what the numbers were, and how work is getting done and how people are hiring people today. Again, you know, when we have these, these coffee talks, we look at which sectors in which industries are leading the report, and look like for this month report, government and healthcare lead the pack with 52,030 8000 hires for the month respectively. But what did you see there, Sania?

Sania Khan 02:49
Yeah, we also saw social assistance and construction on the rise as well. But then we saw transportation and warehousing actually lose jobs for the fourth month in a row. This last one was, I believe, losing 32,000 jobs. And, you know, we would think that pandemic related supply chain issues have mostly resolved so we would be back on track with that stuff. But actually, these declines could be ongoing due to global supply chain issues, influenced by geopolitical conflicts and the wars in Ukraine in the Middle East. And so this could essentially threaten the great the flow of grain oil, consumer goods, and this might affect the labor market with, you know, truckers, freight, jobs, logistic companies that might have to divert to other resources.

Jason Cerrato 03:55
Yeah, I just saw an article a week or two ago around the impacts of these things happening in the world and the rerouting of trade routes and, and shipping. So now we’re already starting to see some of it show up in the numbers.

Sania Khan 04:08
Yeah, exactly. And we’re probably likely to see more of it in the future.

Jason Cerrato 04:16
Going deeper into the report, average hourly earnings rose point 4% on the month and were up 4.1% from a year ago, both higher than respective estimates, which were point 3% and 3.9%. And just thinking of that, and thinking about the time of year, I was looking at some other news reports, and they’re not just looking at the jobs report, they’re looking at holiday spending. And early reports are that holiday spending likely hit a record this year as well rising 5% To 222 point on billion. So hopefully everyone had a wonderful holiday and got what they want under the tree but it looks like on this on the positive side, people are feeling somewhat positive about where we are. What do you think there’s on you Yeah, I

think consumers are exceeding all of economists expectations all around, we were thinking that we are going to see retail spending take a little bit of a nosedive this year, with inflation, a little bit more up. But yeah, again, this month, we saw average hourly earnings rise by 15%. Of sorry, 15 cents. And so that’s probably going to influence the Federal Reserve’s decision to keep interest rates elevated, at least for a few more months, I think they are being closely watched, to see how long they can keep these interest rates elevated without causing a sharp downturn. So that’s something that the federal we’ll be looking at.

Jason Cerrato 05:57
And thinking about this impact on on talent, there’s a couple things here. At the start of the new year, there were 22 states that raised their minimum wage to start the new year. And over the course of 2023, we saw 16 states removed degree requirements and shift to skills based hiring. So I think we’re definitely seeing a labor market where there’s a lot of dynamics happening, there’s a lot of tectonic shifts that are occurring. But people are looking for a variety of ways to address needs for talent in a variety of areas in a variety of sectors. And, you know, it’s coming through in the numbers. But, you know, this is this is playing out. I think one of the things that we were discussing earlier in the week was in some of these previous chats, we’ve been focused on kind of the impact of artificial intelligence on talent in general, and kind of the impact in HR. But now we’re seeing a specific need, not just on the impact of AI, but a specific need for AI specific talent. Right. So you were you were saying there were some interesting findings in some ongoing discussions on that matter harness idea.

Sania Khan 07:06
Yeah, so we know that everyone wants to start implementing AI, and specifically, even generative AI into their workflows and within their business. And now the need for AI skills in your workforce is more important than ever before. But it’s hard for employers to find those people with those right skills. And so companies are still grappling with which roles AI will will change, which ones will be augmented with the technology. And I know that there’s companies like AWS that are increasing their upskilling programs to upskill their workforces with AI enabled skills, and then also for outsiders, as well. And then, you know, there’s other companies that we’re seeing, consulting firms that are asking their workforce to list out the skills that they have, and the expertise that they have, so that they can prepare, and put plans in place to shuffle people around using AI and what what skills that people have best fit together. And so it’s time for people to keep keep their skills up to date, to upskill themselves. And I think it’s going to be a challenging constant training process for all employees and HR really taking the lead on this, as well.

Jason Cerrato 08:47
It’s a conversation that’s robust for tools like talent, intelligence, it’s a conversation that’s robust for viewing your workforce differently. It’s not just the job that they occupy, or what they’ve done for you historically, it’s kind of their whole person, right, and this whole complete talent profile for what skills they have as an individual as a human being. And then once you understand what they have to offer, you can also better understand the talent you already have in front of you to do some of this upskilling and redeployment and, and training or kind of redirection. You had also mentioned that there were some specific initiatives around this related to the government.

Sania Khan 09:28
Yeah, with Biden’s executive order, I believe. It stated that they wanted a chief AI officer for every agency. So they’re looking for 400 of these chief AI officers across agencies and then along with that, they’re also looking for hundreds more of AI professionals. And that’s difficult to to find right so if you are even You’re somewhat interested in this as as an individual, then people should be upskilling themselves. And this is the time to really take advantage and take a look at at what what are the opportunities out there. And the the White House and the feta are looking for such professionals and such skills. So it’s time to take a look.

Jason Cerrato 10:28
One of the interesting things about this specific jobs report is it came at the end of the year. So in addition to looking at the month, there also was a look back to the year kind of as a whole. And one of the things that jumped out at me was, if you look at it, for the average for the year of 2023, this is our second straight year with an unemployment rate where the average was below 4% for the year. And that’s something we haven’t seen in over 50 years. Yeah, so when we talk about when we talk about the late labor participation rate, we talked about the availability of talent, we talked about the need to potentially find other ways to fill some of these vacancies. Now that you look at it, kind of in the bigger picture, instead of just that one month at a time, you kind of see how this is playing out.

Sania Khan 11:15
Yeah, it’s an overall strong labor market, that under 4%, for two years is really great. And that’s we’ve seen that people are kind of moving back into the labor force from the sidelines. So they might have been unemployed or not looking for work, before immigration has picked up a little bit. We’re seeing working moms actually come back to the labor force, disabled folks are able to work from home with these flexible work from home arrangements. And so it’s, it’s been all really great for the US labor market. Unfortunately, what we’re seeing in this last month is that some of those prime age working numbers have been kind of trending downward. So perhaps that was where we saw the peak already. And now we’re back to we’re going to see the decline a little bit of people leaving the workforce just a little bit. Well, we’ll see what happens though.

Jason Cerrato 12:26
In the spirit of these conversations, and always looking at kind of both sides, you know, the the happy and the sad, the positive and the negative, both sides of the story. There was an article in the Wall Street Journal that talked about this labor force participation in the lower unemployment rate, that one of the challenges that some organizations are coming up now is that people aren’t leaving, at the rate they used to so people are staying. And now it’s not the challenge of, you know, the great resignation or the great reshuffle. It’s that there’s people staying in role. And organizations are trying to figure out ways to deal with that, especially if you know, maybe there’s someone else that wants that role, or that person’s not performing.

Sania Khan 13:07
Yeah. It’s interesting how quickly the labor market kind of changes. So he, as you said, we saw the great resignation, where people were job hopping and driving up wages. And now we’re kind of at this great stay where people are staying in their jobs. And we’re seeing from the jolts report from November, we saw that hiring was down and then also quicks word down. So employees are still saying put in their jobs aren’t quick quitting, which makes it more difficult for internal mobility for people to get promoted. And you know, it’s interesting, because I saw that some of these news articles are saying that people stay put because they think that firms are holding on to that last in first out motto. But actually, we did an analysis that eight fold here of the 2022 tech layoffs. And we saw that the majority of layoffs consisted of employees who had more than one year of experience, but less than two years of tenure at the firm. So only 5% of those laid off had less than one year at the firm. So I thought that was an interesting takeaway from our analysis. But overall, I think turnover helps create promotion opportunities, and we might see some of those stags stagnate and then your future.

Jason Cerrato 14:54
So I think you know, from an HR perspective, it brings about a lot of different conversations, you know, If, when we were doing succession planning at one time, you know, we would refer to some of these folks that were kind of staying in position, and not necessarily interested in moving but kind of happy where they are, but maybe not performing to the needs of your organization, we would refer to them as blockers, right? Because they were blocking the position for someone else, and they weren’t interested in moving to another role. But I think, you know, there are some strategies where someone will say, well, let’s performance manage that person, and maybe try to performance, manage them to a different place or performance, manage them eventually out of the organization. I think that’s an old way of thinking. And now it really is around, you know, how do we move beyond the thought of the job to really start thinking about work, and what are some other things this person may be able to do and what are some other ways we may may be able to engage them or deploy them. And that’s where you get into kind of this redeployment and this upskilling, but also this kind of concept of kind of utilization of what the person can do versus kind of the framework they’ve been sitting in. You know, our friend, Josh Burson had a great quote, I pulled from one of his articles that I saw this week around, and this is from him directly, quote, The old idea of a job as a container, quote, unquote, container, for an individual creates many problems. When a company has a new product, or initiative or reorganization, people try to hold on to their jobs, and are afraid to try something new unless it’s a promotion, or viewed as a positive new job, especially when, you know, people are trying to think about career ladders and job architectures. And what that does is it kind of slows down innovation, or slows down, adapting. So, you know, it’s a great kind of quote from from Josh, but it’s thinking around shifting the mindset from what a person does in a specific role to what a person can do within an organization. Right, I think we’re on the cusp of a lot of discussions through that lens in 2024.

Sania Khan 17:02
Yeah, I think what we’ve been seeing with how jobs are structured, and how people are just placed into a job, and they have these X type of skills, and they kind of stagnate throughout their career is kind of out the window, or is soon to be out the window. And I know we’re going to be taking, everyone’s talking about the skills based approach of moving employees around. And we see that with consulting quite a bit. But I think that’s really the future. And, and I think all employees will have to start taking risks in their career, as you’re going to move from one area, or one unit of the of the firm to another. And, and that’s great, because you’ll be able to learn and upskill yourself, you’ll be able to learn about different areas of the business as well. And overall, like have a greater viewpoint of the company and be a better asset to your firm as well. So I think reframing how US workers think about our job, and what we’re here to do, will also be something that we need to kind of change our thinking around. And, and it’s really about the whole, how can you be the best, like asset to your firm? instead? Yeah.

Jason Cerrato 18:31
You know, I recently attended a session that was held by Keith Sanderling, the commissioner from from DC, and he was talking about how it’s never been a harder time for HR leaders, because they’re being attacked on both sides. Right, no matter what they do, they’re being attacked for what they’ve done from both sides. So you can’t win either way. And it’s hard to walk a straight path when you’re getting pushed from from from left and right. And I love your phrase there about reframing. And I bring that up to say, we saw 2023 end in 2024. Start with a lot of organizational D and AI programs under attack. Diversity is a hot topic of conversation. But right now, it’s definitely under attack. And one of the things that I think is happening is, if you look at how it’s been traditionally approached, I think much like this conversation we’ve had this morning, there’s an opportunity to start to reframe the conversation. And I think part of it is coming from this ability to look at skills, right and to look at skills and to look at the total capability of what a person can do or what they’re able to do or what they’re able to learn. You start to open up the opportunity for more people to be included and considered and having a skills based conversation is a different way of having a DNI conversation. And I think it’s one of the reasons why we you know, as I’m as I mentioned, we saw, you know, 16 states removed degree requirements and shift to skills based hiring They’re trying to create opportunity and open up new pathways and avenues for individuals. But kind of what are your thoughts around that?

Sania Khan 20:07
Yeah, I agree. I think it’s an interesting time because Dee and I sometimes gets a bad rap. And that’s why I think we saw some of those DNI officer positions not being filled or being taken away, in the last year or so. And I think it’s because, you know, you see, it gets framed as, oh, I have a team of 10 males, and therefore my next opening, has to have a female or whatnot, and some something along those lines. But that’s not actually what those programs should have been looking for, necessarily. And I think another way to take that same idea, but take it to the next level is using a skills based approach where you’re not just looking at, you know, the female, or the age requirement, or the race or ethnicity, all of those things aren’t relevant, what you’re really looking at is what’s skills are relevant for the job. And so it doesn’t matter whether you’ve worked at XY and Z, it’s really what skills do you have under your belt belt and your learnability. And so if you take this skills based approach, then you’re essentially taking partaking in DNI without being explicit and hiring that female just because you have males on the team. And so you’re actually hiring the most qualified person based on their skills, removing all other factors that could bring in bias and I think it’s like, we’re going to move from DNI to skills based approach to the skills based talent approach. And that’s going to be the real answer for, you know, taking out any bias in hiring.

Jason Cerrato 22:07
All great points. And I think one of the challenges around a lot of diversity initiatives is when you think about how things have been done historically, often, when people would go to recruit for a position, they would look for someone who had done this role before. Yeah, right. And what does that what does that do, it leads to, someone already had to have the opportunity, someone already had to have been included, when you hire them, they’ve already done the job. So if you’re asking them to do the same job they’ve already done, when they start this new job, it’s not as exciting for that long, and then you get all kinds of retention and attrition issues. When you shift to a skills based approach, you can start to look at learnability, right capability and adjacencies. So in addition to including additional people, you know, you can understand how people can acclimate and grow and move into a different area, versus having to have already done something in name already, in a very similar role in a very similar place.

Sania Khan 23:05
Exactly. I think it’s like, overall, looking at the US labor market, it’s going to be a change that’s needed. If you start hiring for capabilities of people and learn abilities of people, and yes, they might have these initial skills, and then they can learn and upskill for the role that you’re hiring for very quickly. And that just means over all, on a labor market bases, we’re just going to be able to have our workforce be like one notch better than we have been, and that we’ve been kind of stuck in this rut before.

Jason Cerrato 23:56
And not just better, but more agile, right? The ability to change direction and move and have a variety of strategies for a variety of scenarios for potential futures. I think that’s going to be a big theme we’re going to be discussing here at 2024. Well, with that it’s been a wonderful morning reconnecting with you, Sania, again, have a Happy New Year. Happy New Year to everyone out there that’s watching this. I think we’ve ended the conversation at a great place. We’re both smiling. I could talk about this all day. But I know we have to get back to work. So thank you for joining me again for one of these Friday Jobs talks. And thank you, everybody for listening. Have a Happy New Year. Back to you, Callie.

Conclusion 24:34
All right. Thanks for joining us today everyone. And thank you Sania and Jason for sharing your insights. We hope you’ll tune in again next month on February 2 For the next jobs talk with April AI. See you all next time.

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