January Jobs Jump

Astounding! Awesome! Boffo! Take your pick. Contrary to the negative headlines and worries about the economy, the January jobs report crushed it. The economy produced 353,000 jobs to start the year, about two times the expected result. The unemployment rate remained at 3.7 percent and importantly, average annual wages were up by 4.5 percent, which means that workers continue to earn more than the annual inflation rate.

[One quick note about prices. If you have not received a bump in pay, inflation has really knocked you for a loop. But according to the U.S. Treasury, real (meaning wages adjusted for inflation) weekly earnings for the median worker grew 1.7 percent between 2019 and 2023. “This means that one week of pay for the median worker now buys more than a week of pay did in 2019, despite higher prices.” And the best gains skewed “toward the middle class and the lower end of the income distribution.”]

The January report also dovetails a better-than-expected 2023, when job creation averaged 255,000 per month. You recall that 2023 was supposed to be the year that high interest rates and elevated prices would tip the U.S. into a recession and as a result, the labor market would suffer.

The January data also caught many by surprise, because there have been a number of companies that have recently announced layoffs. In parsing these headlines, it’s important to distinguish between industries that are still robust (TECH) and those that are actually consolidating (traditional media). For example, Amazon has reduced the number of total employees globally from a peak of 1.6 million in 2021, to about 1.5 million as of the end of last year. But look back to 2019 and Amazon’s workforce was just 800,000, so over the past four years, the growth has been staggering.

The same goes for Salesforce, which just announced another round of layoffs. Even with the cuts, the company has grown the number of employees by 30 percent since 2020. Meanwhile, job reductions in traditional media could be permanent (whomp-whomp), because it is an industry that is facing major headwinds and will likely get smaller.

If you are worried about losing your job, you may want to head back to the office. According to new research, workers who are fully remote are 35 percent more likely to be laid off. Some workplace experts say that working from home makes it harder to build relationships. Additionally, it might be easier to let someone go who you don’t see every day. And for those who still seek to work from home despite the risk, opportunities are dwindling. When some companies announce layoffs, (UPS and Wayfair), they are pairing them with mandates to bring workers back 5 days a week.

All of this could be fodder for those seeking a new job. A new report from Monster found that a whopping 95 percent of workers are looking or planning to look for a job. Now, this could be aspirational to start the New Year, as in “I’m going to work out more and look for a new job”. In other words, this is a survey about what people want, but according to the Labor Department, the number of people quitting voluntarily has been dropping steadily over the past two years. The "quits rate" peaked at 3 percent at the end of 2021 (peak “Great Resignation”) and as of December, was at 2.2 percent. Before the pandemic, the quits rate was 2.3 percent.

If you are seeking a new job, the January report showed active hiring in Professional and Business Services (+74,000), Health Care (+70,000) and Retail (+45,000). Instead of staying within your own industry, it makes sense to find a way to use your skills and apply them to one of these sectors.