Unemployment Rate Hits Pre-Pandemic Low
August 5, 2022 – Employment rose by 528,000 in May as the U.S. unemployment rate edged down to 3.5 percent, according to the most recent U.S. Bureau of Labor Statistics report. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and healthcare. Both total nonfarm employment and the unemployment rate returned to their February 2020 pre-pandemic levels.
Among the major worker groups, the unemployment rates for adult women (3.1 percent) and whites (3.1 percent) declined in July. The jobless rates for adult men (3.2 percent), teenagers (11.5 percent), blacks (6.0 percent), Asians (2.6 percent), and Hispanics (3.9 percent) showed little change over the month.
Among the unemployed, the number of permanent job losers, at 1.2 million in July, continued to trend down over the month and was 129,000 lower than in February 2020. The number of persons on temporary layoff, at 791,000 in July, changed little from the prior month and essentially returned to its pre-pandemic level.
The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 269,000 in July to 1.1 million. This measure returned to its February 2020 level. The long-term unemployed accounted for 18.9 percent of the total unemployed in July.
“The U.S. labor market is defying gravity,” said Becky Frankiewicz, chief commercial officer at ManpowerGroup. “Fears of a possible recession stoked by inflation and an aggressive Fed are eclipsed by the simple reality that employers can’t hire fast enough to meet demand.”
“These are big, broadly distributed gains,” said Julia Pollak, a labor economist at Zip Recruiter. “There was continued strength in even the most capital-intensive and interest rate-sensitive sectors like manufacturing and construction, which suggests that the labor market is still vibrant and dynamic. It is not reacting too negatively to the return to more normal interest rates.”
“The labor market is still running hot even though the temperature has come down by a few degrees,” said Daniel Zhao, senior economist at Glassdoor. “We did see recession concerns pick up significantly in June, but labor demand seems to be holding up.”
“This is not what a recession looks like,” said Nick Bunker, an economist at the jobs site Indeed. “Demand for workers might be stagnating, but it’s still at very elevated levels. The labor market is not signaling a recession.”
Where Job Growth Occurred
- In July, leisure and hospitality added 96,000 jobs, as growth continued in food services and drinking places (+74,000). However, employment in leisure and hospitality was below its February 2020 level by 1.2 million, or 7.1 percent.
- Employment in professional and business services continued to grow, with an increase of 89,000 in July. Job growth was widespread within the industry, including gains in management of companies and enterprises (+13,000), architectural and engineering services (+13,000), management and technical consulting services (+12,000), and scientific research and development services (+10,000). Employment in professional and business services was 986,000 higher than in February 2020.
- Employment in healthcare rose by 70,000 in July. Job gains occurred in ambulatory healthcare services (+47,000), hospitals (+13,000), and nursing and residential care facilities (+9,000). Employment in healthcare overall was below its February 2020 level by 78,000, or 0.5 percent.
- Employment in government rose by 57,000 in July but was below its February 2020 level by 597,000, or 2.6 percent. Over the month, employment increased by 37,000 in local government, mostly in education (+27,000). Employment in local government was below its February 2020 level by 555,000, or 3.8 percent, with the losses split between the education and non-education components.
- Employment in construction increased by 32,000 in July, as specialty trade contractors added 22,000 jobs. Construction employment was 82,000 higher than in February 2020.
- Manufacturing employment increased by 30,000 in July. Employment in durable goods industries rose by 21,000, with job gains in semiconductors and electronic components (+4,000) and miscellaneous durable goods manufacturing (+4,000). Employment in manufacturing was 41,000 above its February 2020 level.
- In July, social assistance added 27,000 jobs, including a gain of 19,000 in individual and family services. Since February 2020, employment in social assistance was down by 53,000, or 1.2 percent.
- Employment in retail trade increased by 22,000 in July, although it has shown no net change since March. In July, job gains occurred in food and beverage stores (+9,000) and general merchandise stores (+8,000). Retail trade employment was 208,000 above its level in February 2020.
- In July, transportation and warehousing added 21,000 jobs. Employment rose in air transportation (+7,000) and support activities for transportation (+6,000). Employment in transportation and warehousing was 745,000 above its February 2020 level.
- Information employment continued its upward trend in July (+13,000) and was 117,000 higher than in February 2020.
Related: Hiring Top Talent in Unprecedented Times
- Employment in financial activities continued to trend up in July (+13,000). Employment in the industry was 95,000 above its level in February 2020.
- Employment in mining rose by 7,000 in July, with gains in support activities for mining (+4,000) and oil and gas extraction (+2,000). Mining employment was 96,000 above a recent low in February 2021.
- Employment showed little change over the month in wholesale trade and in other services
Do we have a talent shortage? “No doubt about it, we have been experiencing a talent shortage for years,” said Frank Scarpelli, managing partner and chief executive officer of HireWerx. “The demand for skilled knowledge workers has exceeded the supply, and the problem will only accelerate in 2022 and beyond. We have a shortage of 400,000 workers today, and we’re on track to see that number grow to over 900,000 over the next decade.”
Consider This Before Joining the Great Resignation
If you’re thinking about joining the Great Resignation and quitting your job, you’re in good company. Resignations are at a 20-year high, and depending on what study you’re reading, one-third to one-half of all U.S. workers are considering leaving their jobs right now. This record number of resignations is fueled by a range of factors, from the understanding that better pay and opportunities may be readily available, to a desire to work for an organization that is more values-aligned, to the desire to have more flexibility about when and where work is done.
“Burnout is also a significant factor that’s driving employees to seek other opportunities,” said Molly Brennan in a new report from Diversified Search Group | Koya Partners. “If you recognize yourself in any of these factors and are considering taking action, you’re likely to find yourself in a good position. The number of open opportunities has created stiff competition for talent, driving up salaries and giving candidates an advantage when it comes to negotiations.”
“Our country is dealing with a significant demographic shift,” said Mr. Scarpelli. “Baby Boomers are the largest generation ever, and they are retiring at a fast pace. Gen X will dominate management roles for the next 10 years while the Millennials gain more leadership experience. The Zoomers are the smallest generation, so the numbers just don’t compute when you consider there just aren’t enough people to replace the Boomers fully. It stands to reason that we are and will be dealing with an ongoing talent shortage.”
“Looking on the bright side, if company leaders modify their thinking, we might be able to mitigate some of the pressures that this shortage presents,” Mr. Scarpelli said. “How? Being more accepting of disenfranchised groups is one possible solution. Relaxing the requirement for a college degree for some positions could be another. We’re seeing this already with some of the major tech giants, like Alphabet (Google) and Microsoft. Leveraging technology, as with artificial intelligence and machine learning, will help. And more fully embracing remote work would give us greater access to resources across the United States and the globe. The employment outlook demands consideration of all possible options.”
Related: Talent Shortages Reach Highest Levels in 16 Years
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media