April 18, 2024

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Employees are bitter on the job market. However that pessimism could also be considerably misplaced.

The Glassdoor Worker Confidence Index in January fell to its lowest degree since 2016, when the profession web site started monitoring the metric, it mentioned Monday. The index measures how staff really feel about their employer’s six-month enterprise outlook.

The decline suggests job safety is a “outstanding” fear, mentioned Daniel Zhao, lead economist at Glassdoor.

“It’s a sign that workers are involved heading into 2024,” he mentioned.

Layoff headlines masks ‘very sturdy’ job market

That deterioration is probably going as a consequence of a wave of layoff bulletins in latest weeks, Zhao mentioned.

To date in 2024, for instance, large expertise corporations together with Amazon, eBay, Google and Microsoft have introduced job cuts. Nevertheless it’s not simply tech. Others like BlackRock, Citigroup and Common Music Group additionally introduced layoffs.

U.S.-based firms deliberate about 722,000 job cuts in 2023, nearly double these introduced in 2022, in keeping with Challenger, Grey & Christmas, an outplacement and govt teaching agency.

Nonetheless, these latest headlines masks energy within the total job market, economists mentioned.

From a employee’s perspective, issues “don’t get any higher,” mentioned Mark Zandi, chief economist at Moody’s Analytics.

Regardless of pockets of layoffs in sure industries like tech, Zandi mentioned, job cuts throughout the broad U.S. labor market proceed to hover close to historic lows, the place they’ve been since spring 2021.

New claims for unemployment insurance coverage are in keeping with their pre-pandemic development in 2019, which economists describe as a interval of labor-market energy. The unemployment fee has additionally been beneath 4% for 2 years.

Certainly, in terms of the common annual unemployment fee, 2023 was the sixth-best yr on document (rating solely behind a number of years within the Nineteen Fifties and Nineteen Sixties), mentioned Julia Pollak, chief economist at ZipRecruiter.

“It’s nonetheless a really sturdy and resilient labor market total,” Pollak mentioned.

Outlook will depend on your reference level

Whereas the Glassdoor index exhibits deteriorating confidence, different measures sign a rosier view in regards to the job market and U.S. economic system.

For instance, client sentiment jumped 13% in January to its highest degree since July 2021, in keeping with the College of Michigan. Equally, a Convention Board ballot additionally discovered that client optimism strengthened in December, throughout all ages and family earnings ranges.

Housing values and inventory costs are at document highs and, in relative phrases, “everybody’s received a job,” Zandi mentioned.

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ZipRecruiter’s Job Seeker Confidence Index additionally rose within the final two quarters of 2023, although it stays beneath early 2022.

Total employee sentiment doubtless will depend on their reference level, Pollak mentioned.

For instance, if staff are evaluating outcomes relative to what was anticipated to occur in 2023 — a yr during which many economists had anticipated the U.S. to tip into recession — then the latest job market appears like “a miracle,” Pollak mentioned.

Nonetheless, staff are extra apt to match their present outlook to that of a yr or two in the past — a time when the job market was crimson scorching and staff had document leverage to get higher jobs and better pay. Since then, “issues have positively cooled and slowed,” Pollak mentioned.

The one ‘blemish’ within the U.S. economic system

The Federal Reserve raised borrowing prices aggressively to chill the economic system and labor market, to finally tame persistently excessive inflation.

The inflation fee has decreased considerably from its pandemic-era peak. However the inflationary episode has left client prices noticeably costlier, particularly for staples like meals and hire, economists mentioned.

“The one [economic] blemish — and it’s a giant blemish — is costs are a lot greater than they had been two to a few years in the past,” Zandi mentioned.

Excessive pandemic-era inflation eroded shopping for energy for the common particular person in consecutive months for greater than two years. Whereas wage progress was traditionally excessive, staff’ paychecks purchased much less.

However that development has reversed: Wage progress now surpasses the speed of inflation for the common particular person, which means staff’ paychecks are rising once more relative to the issues they purchase. If that development holds, client confidence ought to progressively rebound, Zandi mentioned.