Where has 2023 gone? It's a question I keep asking myself, and I'm guessing many of you are asking the same thing. A lot has happened—inflation rates are going down, fuel prices are $1 less than this time last year in many places, and grocery prices dipped in March for the first time since 2020. That's all good news, right?
Not so fast. At the same time, tech, media, finance, and, most recently, retail organizations have announced layoffs of thousands of workers. That's bad news, right? But the economy has added an average of 341,000 jobs every month during the last 12-month period. The 2023 labor market has economists, business leaders, and a lot of others scratching their heads.
According to Affinity HR's “2023 Mid-Year Labor Market Study," here are five trends that have emerged so far this year:
1) Recruitment and unemployment. The U.S. added 209,000 new jobs in June 2023, according to the Bureau of Labor Statistics. While this is a more modest number than in the past few months, it remains significantly high. As does the unemployment rate, which remains quite low at 3.6%.
Don't assume that a decreased number of job openings and possible layoffs mean that recruitment will be easier in 2023. This remains a volatile labor market. If you recruit for entry-level positions, anticipate continued high demand for candidates. Regularly review and update your application process, consider mobile-optimized applications, submissions via LinkedIn and other social networks, and one-click job applications if you don't already have them.
2) Wage growth. The Economic Research Institute updated its salary increase projections for 2023 to 3.79% and salary structure increases to 2.91%. These projections are slightly higher than the 3.5% salary increase and 2.7% salary structure projections made back in January.
Wage growth will continue to vary significantly by occupation type and geography. Remain aware of the differences in all the markets where you operate. Develop and implement a long-term salary planning process that addresses current and anticipated labor market issues.
Also, conduct a review at least annually of your current pay policies for competitiveness and anticipate the need to increase wages to recruit and retain talent. If raising pay is necessary to hire new talent, review pay levels for current, experienced employees to ensure internal equity and minimize salary compression.
3) Minimum wage. Currently, 19 states index minimum wage changes to cost of living increases. Expect more states to adopt these types of indexed changes in the absence of any federal minimum wage legislation.
However, minimum wage changes may not be state-wide and may not take effect on January 1. Also, you must understand the differences between specified minimum wages and prevailing wages. The U.S. Department of Labor reports that North Dakota and South Carolina were among the states with the highest wage growth in 2022. Both states have a current minimum wage of $7.25.
Keep informed of what's happening at federal, state and local levels in all the locations where they do business via The Economic Policy Institute's Minimum Wage Tracker.
4) Legislative outlook. Paid family leave is not likely to be a federal legislative priority for the remainder of President Joe Biden's term. The debt ceiling deal reached in early June does not provide funding for the creation or expansion of any paid leave programs. There hasn't been much activity at the state level on this issue either. Eleven states and the District of Columbia now offer some type of paid family leave for employees; no states have added paid family leave legislation so far in 2023.
Legislation often happens more quickly at the state and municipal levels than at the federal level. Identify the resources necessary to stay informed of changes and new requirements and consult them regularly. Also, recognize that offering paid family leave may offer a competitive advantage in hiring and retention.
5) COVID-19. May 11 marked the end of the COVID-19 Public Health Emergency, which had been in place for more than three years. However, saying the emergency is over is proving to be quite different. The U.S. Centers for Disease Control and Prevention reports that about 40,000 people have died of COVID-19 so far this year, and the disease was the fourth leading cause of death in the U.S. in 2022.
More significantly, enhanced benefits authorized through the Supplemental Nutrition Assistance Program (SNAP) and funded by the federal government are now being rolled back by individual states. A recent New Yorker article reported that the average SNAP recipient is expected to lose about one-third of their monthly allotment. Approximately 40 million Americans receive SNAP benefits.
During the pandemic, individual states received additional federal funding to expand their Medicaid programs. As a result of this expansion, the uninsured rate in the U.S. fell to 8%. But states are now able to start purging their Medicaid rolls, which was prohibited during the Public Health Emergency, and the CDC estimates that up to 15 million people could lose their health coverage in 2023. Medicaid and the Children's Health Insurance Program (CHIP) currently cover about 93 million people.
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