RX2 Solutions Q3 2024 Hiring & Economic Outlook
Q3 during any Presidential election year presents some unique challenges with predicting the future. There are a percentage of companies out there that will wait until after November to make any big decisions and put most/all their hiring on hold until after the election has passed to see how things shape up. With five months to go until the election, we are starting the period where the companies that are going to wait on the sidelines have mostly started. Additionally, the Fed, which is independent from our three branches of Government, will likely wait until after November for any potential rate decrease. A decrease before the election will be seen by many as a political move to help the incumbent administration, despite what Powell has said about the election having no impacti.
The Fed saw some positive news with regards to a possible rate reduction from the number of job openings hitting a three year low of 8.5 millionii. This is good news for buyers (employers) as it means there is theoretically less competition across the board for talent than there has been since the Pandemic. The number of employees who were laid off or quit jobs was almost unchanged from previous months and it appears that we are firmly out of “the great resignation.”
The unemployment rate has steadily been trending up for the past year and went from 3.5% around a year ago to 3.9% today (6.5 million unemployed people)iii. This number still represents “full employment” so the increase in unemployment might be a good thing for justifying a rate cut as salary increases have cooled as of late leading to reduced inflation. In our opinion, the more important measure of the job market is the labor participation rate which has remained steady at 62.7% this year and is up .1% over last year. We are still far from the pre-covid levels of 63.4%. While this looks like a small percentage decrease, every percentage point represents several millions of workers who have left the workforce and not yet returnediv.
Another factor in play now is that the FTC ruled that almost all non-competes are unenforceablev. While this ruling is being challenged in court, until it is settled there’s a ton of ambiguity for workers who want to switch jobs but are holding off due to their non-compete. The FTC said in their ruling that they want employers to treat employees well to make them want to stay employed rather than being forced to stay due to a non-compete. Some companies who want to get ahead of the ruling possibly taking effect are doing what they can to make working conditions better for their employees with such agreements in place.
We have seen 2024 bring about a shift from the heavy sellers’ market in 2021-23 (in favor of the candidates) to a mild to sellers’ market today, in most industries. If things continue to shift the way they have, we may be back to a buyer’s market in the next 12-24 months which is good news for employers (and bad news for employees). Unless there is a sudden shift in the policy of the Fed and/or an increase in workers coming off the sidelines and returning into the job market, we believe that Q3 will be like the rest of 2024 with unemployment around 4% and somewhere around 8M job openings across all industries. What we are seeing is that some industries are booming (such as manufacturing) while others (such as technology) are seeing their biggest slump since the great recession or the dot com bubble. Many employers who over hired and/or hired quickly during Covid are being more selective than ever to pull the trigger and some are only willing to move forward if they find the perfect candidate that may or may not ever arrive. Whoever you are rooting for in November, the clarity that the election should bring will calm down built-in anxiety in the market and hopefully lead to a Fed rate reduction which will give some sectors of the economy a much needed jumpstart.
If you’d like to discuss your hiring strategy with RX2 Solutions and how we can play a part in it, feel free to reach out – info@rx2solutions.com, 610.240.3490.