Job Market Shows Moderate Improvements Across Many Measures
Hard to Complain
The October BLS Employment Situation Release
was no blockbuster. The 214,000 new jobs created by the U.S. economy was on the low side of expectations. That said, this report was positive and well-rounded in a variety of ways:
- Unemployment declined to 5.8%
- Participation rate was up slightly, showing job gains were real
- Employment estimates for August and September were raised a combined 31,000
- Average work week increased
- Workers were better able to find full-time jobs
New Jobs Creation: Leisure and Hospitality Lead the Way
In October, Leisure and Hospitality replaced Professional and Business Service as the leading category for job creation. Education and Health remained a strong source of employment growth.
Temporary Agency Employment – The Beat Goes On
Business continues to increase its reliance on contingent labor. Temp jobs as a percentage of total nonfarm employment set yet another record in October, reaching 2.1%. By design, temp labor is flexible, able to rise and fall easily according to demand. But total temporary employment has increased for 25 consecutive months, setting new record highs each month since July 2013. This persistent growth in the contingent workforce is slowly but surely taking job market share.
Temp Labor – Upward Revisions
While the nonfarm employment estimates for August and September were revised upward, the temp job estimates took a surprising opposite tack. These modest reductions did not alter the picture of record-setting growth, but they do run opposite recent trends. Additional months of data are needed to see whether this is a trend or merely an anomoly.
Wages and Bill Rates
Despite many months of consistent job creation and shrinking unemployment, direct-hire wages have increased less than 2% over the past year. The story with contingent labor is even more pronounced. Despite two years of increases, record levels of temp jobs, and increasing share of the job market, there remains little pressure on bill rates. The U.S. Master IQNdex, which summarizes the hourly rate paid for all the contingent labor assignments managed through IQN, has been essentially flat for more than a year. Demand for contingent labor as a part of the workforce continues to rise, but this has yet to translate to higher temporary labor costs overall.
The October job numbers were a little low, but the overall report was positive and a continuation of a long-term improvement in the labor market. The persistent question remains when this demand will result in higher wages and temp bill rates. Complicating the picture are factors such as the pending ACA employer mandate and minimum-wage legislation. The tightening labor maket must eventually drive up cost, but the numbers have yet to show movement in that direction.