Employers Are Challenged to Find Talent With Continued Low Unemployment Rate and Strong Job Growth
ThinkWhy, a SaaS company helping businesses navigate a new era of work, has released its US monthly jobs report for January 2020. The US labor market added 225,000 jobs and reported steady wage growth in January.
ThinkWhy’s proprietary labor market reporting platform, LaborIQ, is forecasting average annual wage growth will hit 3.3 percent for the year and job growth will slow significantly starting in late 2020.
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“The January jobs report is another “beat expectations” report for growth. Now more than ever, employers need precise labor market analytics and salary answers to win talent in a very tight job market,” said Claudine Zachara, President and COO of ThinkWhy.
At this time, both trade negotiations and the political environment have not deterred hiring decisions or consumer sentiment.
Economic Strengths
- The change in total nonfarm payroll employment for November and December combined was revised up by 7,000 jobs, resulting in average job gain of 204,000 for the final two months of 2019.
- The unemployment rate rose slightly to 3.6 percent in January 2020.
- Wage growth has been strongest in non-supervisory and blue-collar jobs as well as the service-providing sector.
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Challenges
- The Employment Cost Index continues to lag behind wage growth, indicating businesses are not making up wage variances with strong benefits packages.
- GDP for Q4 2019 (advanced estimate) rose 2.1 percent, but full-year 2019 posted its slowest growth in three years at 2.3 percent.
- A global slowdown remains a downside risk to the labor market. Fiscal policy, geopolitical tensions and tariff conversations have caused concern for businesses, although USMCA and the first round of US-China trade talks reached a positive conclusion.
ThinkWhy It Matters: Key Takeaways from the January Employment Report
Most employers will continue to experience a strong and steady labor market and should:
- Focus on engagement initiatives, including non-compensation programs to support retention.
- Offer competitive wages, particularly in the professional and technical sectors to win talent.
- Invest in reskilling initiatives to combat skills shortages and prevent attrition for employees seeking skill enhancement.
“Today’s labor market is complex and evolving, making it more critical than ever for companies to consider a variety of economic variables when making strategic business decisions. Especially as the labor market continues to tighten and job openings continue to exceed available workers, successful businesses will need to execute data-informed strategies on compensation, recruitment and internal training and promotion,” said Dr. Marianne Wanamaker, Associate Professor of Economics at the University of Tennessee and member of ThinkWhy’s Executive Advisory Board.
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