The February Jobs Report was released last Friday, and the headline numbers were encouraging. Employers added 379,000 jobs, posting especially strong gains in sectors of the economy that were hardest hit by the pandemic, including restaurants, bars, recreational outlets, hotels, and medical offices:
·Overall unemployment fell to
6.2%from
6.3% in at the end of January
·The rate for college-degreed workers aged 25+ dropped to
3.8%from
4.0%in January, bringing the figure back in line with the end of 2020
·
379,000jobs were added in February, indicating that the recovery looks likely to accelerate as vaccines become more widely available and restrictions are lifted
·Revisions to January figures showed that
166,000jobs were added that month, resulting in a net positive adjustment of
38,000compared with the figures that were originally reported for December 2020 & January 2021 combined
·End-of-year figures were released for metropolitan areas across the State of Ohio – Columbus (
4.7%) and Cincinnati (
4.7%) led the way for the labor market recovery; on the flip side, Cleveland (
7.6%) and Weirton-Steubenville (
7.0%) posted the worst figures statewide
These numbers are nothing short of fantastic and have caused several economists to upwardly revise their projections for GDP growth for 2021. I’ve seen a few prognosticators suggest that the entire global recovery is contingent upon the U.S. labor market’s ability to return to full employment, and we certainly seem to be on our way. That said, there is a long way yet to go. The private sector is still missing roughly 9.5 million jobs compared with pre-COVID levels. At the current rate of recovery, we wouldn’t experience a full labor market recovery for 4-5 years. Were the recovery to drag out over that pace, the labor market would be at significant risk of permanent scarring as skills atrophy and more workers permanently exit the workforce. Here’s hoping that we can pick up the pace as 2021 really gets underway.
This update tends to focus on the number of jobs in the economy, but I wanted to take time this month to discuss another important aspect of the labor market: wages. Although a federally mandated minimum wage did not make it into the finalized stimulus bill, the concept has gained a lot of media coverage lately, and I have a feeling that Congress will revisit the concept during Joe Biden’s presidency. Typically, the debate gets oversimplified. Proponents argue that jobs are relatively sticky, and suggest that corporations can either afford the raises or pass along prices to consumers; meanwhile, those in opposition argue that the labor market is a zero-sum playground with a fixed amount of spending, meaning that any increase in wages will result in a commensurate decrease in the number of jobs. As always, the truth is likely somewhere in between. For a more nuanced discussion about the pros and cons of the recent $15/hr. proposal, see this
Wall Street Journal article. For an interesting read on the impact of minimum wage hikes on consumer prices, see this
Planet Money think piece.
Although the minimum wage is not particularly relevant to the type of professional positions we typically fill at Robert Half, it does have indirect ripple effects on the economy writ large. If retailers, restaurants, and warehouses start paying $15/hr. for unskilled labor, expectations will shift for skilled accounting, finance, and technology workers – even at the entry level. The key takeaway:
if you are looking to hire top performers, you need to pay competitively. Our recruiters in Columbus, OH report that candidate salary expectations have not decreased as they have during past recessions; on the contrary, salary expectations are on the rise as consumer confidence continues to rebound from the pandemic. If you’re hiring any time soon, I’d be more than happy to provide a complimentary copy of Robert Half’s Salary Guide as a point of reference – just shoot me an email.
As always, please let me know if there’s anything we can do to assist from a personnel standpoint – whether it’s direct hire, temp-to-hire, contractor or consultant, I’d be more than happy to help.
Hunter Lent, CPA
Client Service Director
Phone: (419) 297-5841
Click here to book a meeting with Hunter Lent
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