For the last several months, talk of the labor market has centered on interest rates. The economy has been in steady recovery mode and in December, the Federal Reserve increased interest rates by a small margin. This was the first increase in interest rates since they were brought to zero in 2008—a move that made it easier for banks to lend and offset the effects of the recession.
Now, with interest rates off the floor, the conversation has turned to recession watch. Janet Yellen, the Fed chair, signaled that she is concerned with a potential slowdown in the country’s steady climb out of the financial crisis. This pessimism has roiled the markets in recent weeks and made “recession” a trending word.
Yellen, however, also said the “labor market is continuing to perform well,” a fact we see playing out in strong job listings on Indeed across industries. Despite headwinds from Europe and China, and big hits to the energy sector, US employers are still hiring and workers are gaining confidence in their ability to quit and find new work according to recent job opening and turnover results. And, we still see room for more workers and more jobs, which in turn can drive the US economic engine. Where jobs have been lost in energy, they are being gained in a host of other areas, from healthcare to hospitality.
This strength, however, comes with caveats. For one, wage growth continues to be stagnant, meaning workers have less to spend, which may hurt overall economic growth. Furthermore, labor force participation continues to bump along the bottom, though we saw signs of hope that this can change in last month’s jobs report.
Most interesting to us, however, is whether the jobs being gained are good jobs. Do they provide good opportunities for workers? Do they drive major growth in the economy?
Take hospitality, for example, where we have seen double-digit growth in employer demand in January on Indeed. These jobs are keeping the total job growth count up in the face of declines from other industries such as manufacturing and the aforementioned energy.
But historically, manufacturing jobs tended to be higher paying positions with potential for long-term employment. Hospitality is a lower-paid industry notorious for churn, and susceptible to quick downturns depending on consumer sentiment both domestically and nationally.
What does it mean, then, if we continue to see this shift in the jobs available?
It could mean this strong job market will continue without strong economic growth—a combination that can’t last forever. Ideally, though, we’ll see other areas of employment start going up with the labor market.
The quality and salary level of jobs is something we’ll be watching closely. This Friday, the jobs report will provide more insight not just how many jobs the economy gained, but what kind.