Is Labor Market Dynamism Returning Ahead of the Election?

⬇️ 1.7% workforce growth rate in September 2024; lower than the growth rate observed in August. The positive workforce growth rate comes amid a decline in hiring. Most notably, the attrition rate has stabilized after consistently declining since mid-2022.

⬇️ Of workers who started a new job in September, 41.5% have transitioned from different roles and 69.1% have switched industries. All industries witnessed a decline in the share of workers coming from other industries.

⬇️ 2.04% decrease in active job listings in September from August.

⬆️ 9.2% increase in the number of employees notified of layoffs under the WARN Act compared to August 2024.

Revelio Labs’ hiring and attrition also continue their declining trend, although attrition is starting to stabilize

The most recent JOLTS report published on October 1st published data on hiring and attrition through August 2024. JOLTS data showed that both the hiring and separation rates continued to decline in August, a trend that we observed in our previous edition of the Workforce Digest. Revelio Labs’ workforce intelligence data show that while annualized hiring continued to decline in September, the attrition rate has stabilized for the first time since mid-2022. The annualized hiring rate stood at 14.7% (slightly lower than the hiring rate recorded in August). Meanwhile, the attrition rate stood at 13% (slightly higher than the 12.9% recorded in August). The workforce growth rate (difference between hiring and attrition rates) stood at 1.7% (lower than the growth rate of 1.9% observed in August on a m.o.m basis).

Sectoral hiring and attrition have only changed slightly compared to August. Overall, most sectors saw a slower growth rate in September compared to August. The Construction sector continues to lead the pack in terms of workforce growth rate. Construction recorded the highest workforce growth rate (4.9% workforce growth in September compared to 5.2% in August). The Retail and Leisure and Hospitality sectors continue to have a decline in the workforce (Retail saw a growth rate of -1.4% and Leisure & Hospitality saw a growth rate of also -1.5% in September).

Hiring has increased in many states in September compared to August, although it has declined in the largest, most populous states, such as New York, California, and Pennsylvania. The largest decline in hiring occurred in Massachusetts (-0.6 p.p.).

Of those who started a new job in September, 41.5% have transitioned to different roles and 69.1% have switched industries.

Using Revelio Labs' extensive workforce intelligence data on millions of employee profiles in the US, we track workers’ transitions between industries and occupations. Our analysis shows that 41.5% of workers who started a new job in September did so by switching their broad job categories, almost unchanged from the 42.3% observed in August. Furthermore, 69.1% of workers who started a new job in September started jobs in different industries - up from the rate in August (68.6%).

The left panel in the figure below shows the difference in the share of workers who switched to a different industry relative to August 2024. Many sectors saw an increase in the influx of workers from other industries; most notably Education and Retail. On the other hand, Transportation, Information, and Retail saw a decline in the share of workers transitioning from other industries.

The right panel shows the difference in the share of workers who started a new job in a different role relative to August 2024. Less technical roles, such as sustainability specialist and coordination exhibited the largest increase in the share of workers transitioning from different roles compared to the previous month, while business-related roles, such as business operations and HR saw the largest decline.

Job postings decreased slightly in September

The active job postings index decreased slightly in September after two consecutive months of increasing. Job listings increased by 3.1% compared to the previous month. New job postings decreased by almost 3.3% month-on-month, while removed job postings also decreased by 4% from their level in August.

The decrease in job postings reflects a decline in postings in most sectors, with the Real Estate sector experiencing the largest decline (12.8% decline in the number of active job listings in September compared to August). Yet, some sectors have seen an increase in demand for workers, most notably the Government sector, where active job postings increased by 6.5% compared to August. Other sectors where active job postings increased include Retail, Leisure and Hospitality, and Information. Many roles have also seen an increase in demand, most notably is Development Manager.

Layoffs continue to decline

The number of employees receiving layoff notices under the WARN Act decreased further in September. The decline in the number of employees for 3 consecutive months have shifted the underlying trend of the layoff series to start decreasing. The number of layoffs is currently almost equal to its level a year ago after they have been elevated on an annualized basis for many months.

Quarterly highlight: Employee sentiment is at an all time low, although it is starting to rebound

In our previous research, we have shown that employee sentiment, particularly business outlook sentiment, serves as a leading indicator for negative events in a company, such as mass layoffs or the crypto collapse. We analyze overall average employee sentiment in the US. We find that both overall employee sentiment and business outlook sentiment have been continuously decreasing since they peaked in March 2021. As of March 2024, overall rating is back to the same level it was before the pandemic, while Business Outlook sentiment is at an all time low - lower than the pre-pandemic level. It is important to observe that in the last quarter, employee sentiment has started to recover, although it is still very low.

Highlight of the month: Swing states are swinging

Ahead of the elections, our recent research has zoomed into the labor market conditions in key swing states. The Democrats are running on the Biden administration’s jobs record, but is that enough to help them win? Swing states can definitely sway the election results. Revelio Labs’ data shows that employee sentiment among workers in key swing states is very weak, as the labor market cools ahead of the election. While the labor market remains strong overall, key indicators are noticeably weaker in swing states compared to where they were during the midterm elections in 2022.The decline in key labor market metrics may undermine what might have been Democrats’ strongest economic achievement—the robust US labor market.

Conclusion

Ahead of the elections, the US labor market remains quite robust. Despite the increase in the unemployment rate in 2024 — before it drops slightly in August and September — the labor market remains solid, with added jobs, growing workforce, and relatively low levels of layoffs. Our data has started to show some rebound in the levels of attrition that have been declining consistently since mid-2022. While we do not differentiate voluntary from involuntary attrition, the fact that layoffs remain stable suggests that this increase in attrition reflects some voluntary turnover; something that should help the dynamism of the labor market, and potentially boost hiring in the coming months. Even though we observe a decline in job postings in September, it is not a worrisome shift of trends. We expect demand for workers to increase more in the following months with further interest rate cuts.

Please view our data and methodology for this job report here.