U.S. job growth remained strong in February, posting 38% higher than economists’ projected 200,000 job gains for the month. Both December and January saw downward revisions by the U.S. Bureau of Labor Statistics (BLS) totaling 167,000 jobs below initial estimates, which is attributed in part to overestimations linked to holiday hiring and other seasonal variables. Despite the revisions, both months, alongside February, posted strong gains. Consistent with a positive January trend, most sectors experienced some growth, with major gains led by healthcare, leisure & hospitality, and government roles.
Chart Source: Bureau of Labor Statistics
The labor force participation rate (LFPR) for those in their prime working age, defined by the BLS as those aged 25 to 54, climbed month-over-month from 83.3 to 83.5 in February. This increased rate was also recorded in June, August, and September of last year, and prior to that had not been seen since May 2002. The LFPR is nuanced, of course, depending on the count of the population seeking employment.
A highlight of the February report directly linked to this increase shows that 267,000 women joined the labor force. While unemployment ticked up month-over-month for women from 3.4% to 3.9%, which is predominantly linked to this increased participation.
Meanwhile, overall unemployment also increased from 3.7% to 3.9%, which again, economists linked to more workers entering the labor force, in addition to workers leaving or losing jobs. The story isn’t quite so rosy for minority groups that are often hit first and hardest when the labor market begins to turn, according to Bloomberg. Some of this can be seen in the February report, where the unemployment rate for White Americans remained flat at 3.4%, while the rate for Black Americans increased from 5.3% to 5.6%.
Another major contributor to the U.S.’s strong economic recovery post-pandemic is immigration. In 2023, an influx of migrant workers entered the U.S. workforce to the tune of 1.2 million, as compared to 423,000 in 2022. Much of this is tied to changes made by local governments in New York and Illinois, according to The New York Times, which shortened the time between applying for asylum and obtaining a work permit from six months to one month. As a result, foreign-born workers now make up 19.4% of the labor force, according to February 2024 BLS data.
Chart Source: BLS, St. Louis Fed
According to Glassdoor’s Lead Economist, Daniel Zhao, the Glassdoor Employee Confidence Index fell for the second straight month, the lowest measured since 2016, and spells continued angst for workers in the wake of looming layoff headlines. The index measures worker sentiment regarding their employer’s six-month business outlook.
Two other measurements that indicate worker confidence are wage growth and quits rates, both of which sit at marked lows. February’s month-over-month average hourly wage increased at a rate of 0.14%, which is the lowest measured in two years, and the total nonfarm quits rate sits at a post pandemic low of 2.1.
Chart source: St. Louis Fed (Wage), St. Louis Fed (Quits)
All things considered, February’s overall uptick in unemployment alongside leveling wage gains has the Fed more at ease. As covered by Yahoo Finance, Jerome Powell indicated on Wednesday that “supply and demand conditions have continued to come into better balance.” As a result, the CME FedWatch Tool predicts the first rate cut will happen in June 2024, with a total of three to four rate cuts this year.
Restaurant sector is the second largest private sector employer, with one in ten Americans working in the restaurant industry today. Despite these impressive stats, in a recent January 2024 survey by the National Restaurant Association, restaurant operators say their top challenge is recruiting and retaining employees. While restaurant employment has returned to pre-pandemic levels, it took roughly four years to reach that mark.
Chart source: Bureau of Labor Statistics
It is expected that restaurant industry employment will continue to increase, though the workforce is not as distributed as it was pre pandemic – with 250,000 jobs that still remain lost for full service restaurants. On the other hand, Quick Service (QSR), Snack, and Bars employment gain is almost opposite of the decline in table service post-pandemic.
Chart source: Bureau of Labor Statistics
Looking at Recruitics’ cost per application (CPA) trends for programmatic job advertisements across Food Preparation and Serving jobs, the Nationwide CPA continues to trend downward for a second consecutive year with 2023 at a $11.74 CPA, down 34% from 2022’s Nationwide CPA of $18. In 2023, 31 states were at a CPA below $14 and only four states trended above a $19 cost per application – Alaska, West Virginia, Wyoming, and North Dakota.
Chart source: Recruitics Analytics
The Employment Cost Index (ECI), a tool used to measure the current costs of labor, remained on an upward trend for Accommodations and Food Service though appears to be tapering off at the end of 2023.
According to Indeed’s hiring insights data, state-level hiring competition for food preparation and service roles is highest right down the central states of the U.S. The lowest competition score was measured in New York state at 68, and the highest rate of 92 was measured in North and South Dakota, where unemployment sits among the lowest in the country: 1.8% in North Dakota and 2% in South Dakota.
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