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  • Writer's pictureNick Andriacchi

Productivity Issue? April Jobs Report

Staffing Industry Offers Solutions for Low Productivity


Productivity Fell 7.5% in the First Quarter – Biggest Drop Since 1947


When I saw the headline earlier this week, I wasn’t super shocked. With COIVD still affecting workers, supply chain issues and lots of newly hired workers (whether new or changing jobs) not yet full up-to-speed in their jobs – I expected this number to be off as these situations are not optimal for good productivity.


But why is this statistic important? With employment costs continuing to rise, to help limit the impact, firms often adopt new technologies or invest in equipment to make their workers more productive. This increases output and profitability for the company (and supplies for the consumer). Generally, rising productivity can help offset the inflationary impact of wage increases plus keep overall inflation in check. We saw that during the technology boom in the late 1990’s.


This is where staffers come in. I have written a couple of pieces on how staffers can offer a solution’s to boost their clients’ productivity and their own by retaining key talent.




A couple of items that caught my attention in the April 2022 report:


· The economy added 428,000 jobs in April, more than expected, and wages grew by a solid 0.3%, or 5.5% year over year. Please note: wage growth has slowed a little bit in the last two reports.


· The labor participation rate dipped in April with the bulk of decline in the labor coming from the 20-25 age group. That group was down a full percentage point and I really wonder why the steep decline. This could be a statistical aberration so let’s see if this holds in the next few reports.


· The percent of people participating in the workforce is key because when that ratio improves, it could signal easing of the labor shortage and less pressure on wages.




Analysis of the April Employment Report


· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons at 7.0%.


· Prime age labor force participation rate (ages 25-54) was flat this month at 82.5%. This number is up .9% since September and is now down by only .5% since February 2020, the last month before the pandemic started.


· The overall labor force participation is 62.2% down .2%.


· Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or0.3 percent, to $31.85 in April. Over the past 12 months, average hourly earnings have increased by 5.5 percent. In April, average hourly earnings of private sector production and nonsupervisory employees rose by 10 cents, or 0.4 percent, to $27.12.


· The average workweek for all employees on private nonfarm payrolls was unchanged at 34.6hours in April. In manufacturing, the average workweek for all employees fell by 0.2 hour to 40.5 hours, and overtime held at 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.1 hours


· APD reported that 247,000 jobs were lost in January


Source: ADP, BLS, CNBC, ABC News




JOB OPENINGS AND LABOR TURNOVER – MARCH 2022


The number of job openings was at a series high of 11.5 million on the last business day of March, although little changed over the month, the U.S. Bureau of Labor Statistics reported today. Hires, at 6.7 million, were also little changed while total separations edged up to 6.3 million. Within separations, quits edged up to a series high of 4.5 million, while layoffs and discharges were little changed at 1.4 million. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, by four geographic regions, and by establishment size class.

Job Openings


On the last business day of March, the number of job openings was little changed at 11.5 million, the highest level in the history of the series which began in December 2000. Over the month, the job openings rate was little changed at 7.1 percent. Job openings increased in retail trade (+155,000) and in durable goods manufacturing (+50,000). Job openings decreased in transportation, warehousing, and utilities (-69,000); state and local government education (-43,000); and federal government (-20,000). Job openings increased in the South region.


Hires


In March, the number of hires was little changed at 6.7 million. The hires rate was unchanged at 4.5 percent. Hires were little changed in all industries and in all four regions.


Separations


Total separations includes quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.


In March, the number of total separations edged up to 6.3 million (+239,000). The rate was little changed at 4.2 percent. Total separations were little changed in all industries. The number of total separations increased in the South region.


In March, the number of quits edged up to a series high of 4.5 million (+152,000). The rate was little changed at 3.0 percent. Quits increased in professional and business services (+88,000) and construction (+69,000). The number of quits increased in the South region.


In March, the number of layoffs and discharges was little changed at 1.4 million. The rate was unchanged at 0.9 percent. Layoffs and discharges were little changed in all industries and in all four regions.


The number of other separations was little changed in March at 380,000. Other separations increased in construction (+12,000); transportation, warehousing, and utilities (+11,000); wholesale trade (+10,000); and educational services (+4,000). The other separations level decreased in information (-6,000). Other separations were little changed in all four regions.


Net Change in Employment


Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining.

Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.


Over the 12 months ending in March, hires totaled 77.7 million and separations totaled 71.4 million, yielding a net employment gain of 6.3 million. These totals include workers who may have been hired and separated more than once during the year.


Establishment Size Class


In March, the job openings rate increased in establishments with 50 to 249 employees and establishments with 250 to 999 employees. The job openings rate decreased in establishments with 10 to 49 employees. The quits rate decreased in establishments with 1,000 to 4,999 employees. The total separations rate increased in establishments with 250 to 999 employees. For a more in-depth description of the JOLTS establishment size class estimates, please visit


www.bls.gov/jlt/sizeclassmethodology.htm.


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