February Jobs Report Preview: Hot N Cold
Aaron Terrazas
Chief Economist at Glassdoor | Mar 6, 2024
Like the nearly-jilted bride in the late-2000s pop hit “Hot N Cold,” anyone watching the U.S. labor market has to feel a little bit confused right now. Making sense of current employment trends requires us to hold several seemingly contradictory truths at the same time.
- High profile layoffs continue to dominate business headlines, but the total numbers remain muted relative to historic norms. Some companies are both hiring and firing at the same time. Surges of hiring and firing historically come in waves, and it’s unusual for companies to be doing both at the same time.
- Despite largely pristine economic data reports, the reality for many active job seekers feels like a far cry from the statistics. Hiring has clearly slowed, meaning that job seekers are having to invest greater effort to find a position.
- Anecdotal commentary suggests that it is still difficult for many businesses to hire for skilled trades roles and some frontline service work, while labor supply in the market for well-educated desk workers feels increasingly oversaturated.
- Unemployment is up sharply in some communities, but is still just off historic lows and continues to hold steady in other parts of the country.
As we await the results of BLS’ February 2024 jobs report later this week, it is important to keep in mind the statistical reality that, while nationwide aggregates may be most relevant for economic policymaking, for individual workers there is no single labor market – but rather many, sometimes-sparsely interconnected regional-, skill- and industry-specific labor markets. Their lived reality can differ – sometimes substantially – from what the cruising-altitude stats suggest.
- Jobs growth to slow after a blockbuster January. Payroll gains far exceeded forecasts in January, due in part to annual revisions, but are poised to return to a more sustainable pace in February. Improved business optimism and tentative new investment with inflation and interest rate fears receding at the start of the year likely offset the downward pressure to February payrolls from several headline layoffs in January.
- Unemployment rate up. After holding at 3.7% in December and January, we expect that the unemployment rate ticked higher to 3.8% in February. Unemployment insurance claims have remained low, but have been an inconsistent contemporaneous indicator of unemployment trends. Though many recently laid-off workers appear to be finding jobs quickly, January’s layoff spree is likely to be visible in the headline unemployment figures.
- Wage growth likely to slow to 4.1 percent. Average hourly earnings re-accelerated in January, rising to 4.5% on an annual basis – the fastest pace since September 2023 and the opposite direction of what inflation-hawks had hoped. Minimum wage increases that went into effect at the start of the year are one obvious, transitory reason for the bump; the downstream effects of these changes are likely to fade in February.
- Hours worked to rebound after weather disruptions. Average weekly hours dipped by 0.2 hours in January to their lowest level since 2010, aside from March 2020 amid widespread shutdowns during the early days of the COVID-19 pandemic. Much of the January dip was due to weather-related disruptions, so we expect hours worked to rebound in February.
Finance Jobs a Year After the Silicon Valley Bank Failure
March 2024 marks the one year anniversary since the failure of Silicon Valley Bank, which set off a series of crises in the regional commercial banking industry and led to several bank mergers and closures. While the broader economy was ultimately largely unaffected by the short-lived crisis, due in part to decisive regulatory intervention, the episode changed the trajectory of the finance industry – which directly accounts for about 1 in 15 private-sector jobs nationwide.
The finance industry covers a sprawling set of activities, but among the 10 detailed sub-industries under the heading that is most adjacent to the SVB crisis (“credit intermediation and related services”), two saw a clear inflection in employment following March 2023.
- In commercial banking – the largest sub-industry that covers businesses that issue most business and consumer loans – employment is down by nearly 25,000 jobs (-1.7%) through January 2024.
- Real estate credit payrolls are down by 12,100 jobs (-6.0%) through December 2023, though that is likely tied to the high interest rate environment more so than directly to last year’s regional banking crisis.
Consumer lending employment appears to have continued its pre-SVB slide, while credit union employment increased through late 2023, but has plateaued in recent months.
Overall, the commercial banking sector has seen a modest contraction in payrolls over the past year, though it is difficult to attribute these shifts directly to the SVB failure as they are likely closely associated with the broader industry and interest rate trends that drove the crisis in the first place as well as unique features of the individual failed banks.
Aaron Terrazas
Aaron Terrazas is chief economist at Glassdoor. He oversees the Glassdoor Economic Research program, providing research, analysis and commentary on today’s evolving workplace and fast-changing labor market. Previously, Aaron served as the director of economic research at the trucking startup Convoy, and served in a similar role at the real estate marketplace Zillow. He started his career as an economist in 2012, supporting the work of the Deputy Assistant Secretary for Macroeconomic Analysis at the United States Treasury Department, and also worked as an analyst on immigration and labor markets at the the non-partisan Migration Policy Institute. He was educated at The Johns Hopkins University and at Georgetown University.
Tags:Labor MarketUnemployment
