Despite Economic Uncertainty, the Labor Market Shows Few Signs of Weakness (Report Preview)

While the economic outlook has been clouded by the recent banking crisis, labor market indicators still remain strong
Morning Consult Economic Intelligence - Labor Markets - America
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April 05, 2023 at 5:00 am UTC

Key Takeaways

  • The share of U.S adults reporting lost pay or income fell from 9.7% in February to 9.5% in March, reflecting the resilience of the U.S. labor market. The incidence of income losses was relatively low across industries tracked by Morning Consult Economic Intelligence.

  • In a sign of labor market tightness, more and more workers are looking to make an employment move. As of March 25, 20.2% of all employed adults and 22.0% of prime-age employed adults were actively applying for new positions. 

  • As reported in Morning Consult’s Small- and Medium-Sized Business Report, difficult operating conditions are leading SMBs to slow hiring. While these companies continue to increase headcounts for now, the pace is slowing and hiring plans are considerably less ambitious than they were in Q3 2022.

This memo offers a preview of Morning Consult’s April U.S. Jobs & Labor Report. Morning Consult Economic Intelligence subscribers can access the full report here.

The U.S. labor market remains very tight. Unemployment is low, as is the incidence of pay or income losses, according to Morning Consult’s high-frequency tracker. There are still nearly two open positions for every unemployed job seeker, and the share of employed U.S. adults who are actively applying for new roles has risen in recent months.

Workers in the food & beverage and leisure & hospitality sectors are reporting relatively low levels of lost pay. Employers in these areas have struggled to hire and retain workers for some time, and demand for in-person services, including discretionary purchases, remains strong. While February saw a decline in momentum, Morning Consult data shows that U.S. consumers are still spending. 

Shares of U.S. workers who lost pay or income in the prior week, by industry
(4-week moving average)
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Source: Morning Consult Economic Intelligence

In light of high inflation and consumer spending, workers are seeking to increase their compensation. As the Federal Reserve Bank of Atlanta data shows, job switchers continue to reap better wage gains than job stayers, so many are aiming to increase their pay by switching jobs. According to Morning Consult, as of March 25, 20.2% of employed U.S. adults and 22.0% of prime-age employed adults were actively applying for new positions, surpassing the previous peak set back in March 2022. 

Despite the higher level of applications, the pace of hiring, especially by small- and medium- sized employers, is slowing. According to Morning Consult’s latest report on small- and medium-sized employers, the share that said they were increasing their employees has fallen. In Q1 2023, 28% of SMBs said they had increased their number of employees in the past 3 months, compared to 43% in Q3 2022.That said, the share of companies that say they are actively reducing headcount has only risen by a small amount

At the margins, there are some signs that the labor market is cooling as labor force participation edges higher, wage growth moderates and businesses rein in hiring plans. However, a full year after the Federal Reserve began raising interest rates, most labor metrics still reflect a robust labor market. While financial markets are now pricing in imminent interest rate cuts, policymakers at the Fed maintain that rates will remain elevated until 2024. For the Fed to become more accommodative with its monetary policy, there would likely need to be more deterioration in the labor market. While we are not seeing this yet, high-frequency labor data is more valuable than ever in such an environment.

About this report

Morning Consult’s monthly U.S. Jobs & Labor Report provides a detailed assessment of the current state of the U.S. labor market, featuring proprietary data that provides enhanced scale, frequency and depth to official data sets.

Businesses and investors rely on this report to identify emerging labor trends and better understand how to attract, hire and retain talent.

The report draws on Morning Consult Economic Intelligence, a high-frequency global economic data set reflecting more than 17,000 daily economic surveys across the 43 largest global economies.

Full methodology and average daily sample sizes per country can be found here.

A headshot photograph of John Leer
John Leer
Chief Economist

John Leer leads Morning Consult’s global economic research, overseeing the company’s economic data collection, validation and analysis. He is an authority on the effects of consumer preferences, expectations and experiences on purchasing patterns, prices and employment.

John continues to advance scholarship in the field of economics, recently partnering with researchers at the Federal Reserve Bank of Cleveland to design a new approach to measuring consumers’ inflation expectations.

This novel approach, now known as the Indirect Consumer Inflation Expectations measure, leverages Morning Consult’s high-frequency survey data to capture unique insights into consumers’ expectations for future inflation.

Prior to Morning Consult, John worked for Promontory Financial Group, offering strategic solutions to financial services firms on matters including credit risk modeling and management, corporate governance, and compliance risk management.

He earned a bachelor’s degree in economics and philosophy with honors from Georgetown University and a master’s degree in economics and management studies (MEMS) from Humboldt University in Berlin. 

His analysis has been cited in The New York Times, The Wall Street Journal, Reuters, The Washington Post, The Economist and more.

Follow him on Twitter @JohnCLeer. For speaking opportunities and booking requests, please email [email protected]

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Jesse Wheeler
Senior Economist

Jesse Wheeler previously worked at Morning Consult as a senior economist.

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