ING Americas’ Post

Pay growth kept slowing in the final months of 2023, according to the Employment Cost Index. Why it matters: It's more evidence the labor market is cooling down — this time, from a key measure of compensation watched closely by the Fed.

Two insightful compensation trends from Ruth Thomas: 🔥 During the hot labor market last year, employers had to raise new hire salaries above their current ranges to attract candidates, with new hires moving for 15-20% increases.  We know this caused pay compression issues for many, and employers adopting good practice made internal equity adjustments to ensure their valuable tenured talent was not disadvantaged. Hence the dramatic wage growth that we saw through 2022. 🛑 Hiring salaries aren’t being lowered so much as salary offers aren’t being hyper-inflated anymore. There is a slow cooling of the labor market from the frenzied state of the Great Resignation, but it’s still competitive as relatively low unemployment persists. The difference now is that organizations aren’t having to frantically adjust their pay ranges to attract applicants; offers are being accepted within the ranges provided. #getpayright #fairpay #paytransparency https://lnkd.in/g8Db_66w

“Doublethink means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them.” - 1984 (George Orwell) #useconomy #inflation #2023trends #2023hiring #2023layoff #2023layoffs #whytrumpiswinning #trump2024 #bidenomics #bidenadministration #biden #2024elections #2024trends #2024election

November jobs report was broadly strong! Here are some of the main takeaways: -Payrolls rose 199k, above estimates and boosted by the return of 30k striking auto workers -Unemployment rate unexpectedly fell, and monthly wage growth picked up -A measure of employment from the household survey rose sharply, more than offsetting the prior month's drop. It reflected a surge in people finding work who were previously not in the labor force or unemployed This report is at odds with other data lately that have depicted a softer jobs market, such as fewer open positions and a rise in people receiving unemployment benefits. For the Fed, it doesn't change expectations for officials to hold rates steady at next week's meeting. But this deflates bets for rate cuts early next year, and likely shifts the focus to inflation numbers as policymakers gauge how long to maintain interest rates at this cycle’s peak. Read our full story here from Bloomberg News, a team effort aided by Reade Pickert, Augusta Saraiva, Mark Niquette, Vince Golle, Cécile Daurat & Scott Lanman #useconomy #jobmarket #labor #federalreserve

Trick or treat? Well, it's a mixed bag. Wages and benefits increased for workers, just not so much, but perhaps enough for the Fed to raise interest rates to curb inflation. But regardless of what happens with interest rates, the picture remains complicated. On paper, employers are definitely spending more on wages and benefits, which highlights continued competition for workers and underscores the resilience of the U.S. job market amid the highest interest rates in 22 years. But that only tells one side of the story. There's this prevailing notion that workers still have lots of leverage because of the tightest labor market in decades, which is subsequently driving wage increases. The reality, however, is a little less rose-colored glasses. For one, wage increases even at the height of the great resignation have never kept up with the rate of inflation. That's one reason why every sentiment survey continues to show so many Americans feeling gloomy about the economy. Another is what we consider a strong labor market. On the surface, new applications for unemployment benefits remain at historically low levels and job openings continue to dwarf the number of unemployed people actively seeking work by millions. But when you dig into the types of jobs available, that provides more of the story. Many of the job openings have been in the leisure, hospitality and food services, while openings in higher paying information and professional service areas have been weak. That's a big reason why wages have gone up, but not as much as last year at this time. Increases in wages are a big positive for the workforce, which hasn't really seen significant increases in decades. But the big test is likely to come in the months ahead. Higher borrowing costs, tougher lending standards from banks and the resumption of student loan repayments are all expected to put a wet blanket on the economy, and let's not forget the continuing saga known as our government with a possible shutdown next month. Is our economy SweeTARTS or Sour Patch Kids...take your pick though it may be more candy corn https://lnkd.in/gBFvZVzK #workers #wages #interestrates #economy #inflation #workforce #federalreserve

Just yesterday I wrote about how wage increases were slowing in the UK (but that the real issue was finding talent). In the US, the wage rises continue and as can be seen in the article, part of this is the premium required for people to switch jobs. Again, a battle for talent. Whilst this is a separate point, the average offer of $69,745 (£54,544) versus the UK's (forecast) average salary of £29,588 highlights the difference in GDP output (and productivity) per employee. A full 85% higher ... Never has operational efficiency and employee productivity been more important. #workflowautomation #workingcleverly #operations #operatingefficiency #talentacquisition #talent https://lnkd.in/ePzzmqn9

The pace of wage growth has accelerated due to lingering post-pandemic dynamics: “There are two key reasons for this phenomenon,” said Adam Schickling, CFA, a Vanguard economist who studies the U.S. labor market. “Sectors remain where demand for labor well exceeds supply, such as health care, professional services, and leisure and hospitality. And firms have been reluctant to fire or lay off workers given the challenging labor supply environment.” Read more in our latest monthly outlook: https://vgi.vg/3QXktGI #VanguardInsights #Macroeconomics

It seems like there are mixed opinions about the latest labor market data. Some experts think we have reasons to be cheerful, while others believe we are still far from stable. I agree that with inflation falling, companies and employees may have more control over operating costs, which is a positive sign. However, the 9.8% hike in the national minimum wage could be challenging for many companies, and it might lead to more strikes. Do you have any thoughts on this? #labourmarket #recruitmentspecialist #datadrivendecisions https://lnkd.in/e5vacgx6

Great insight from Betsey Stevenson on how the balance between employers and employees is changing - and has yet to settle into a stable norm. This dynamic is at the heart of all future looking people strategy. #people #data #analytics #workforce #peoplestrategy