Workforce Trends in US and Canada: Low Unemployment and High Vacancy Rates Present Challenges

The following is an excerpt from Allegis Group’s latest research report, “Global Workforce Trends 2018”. 

Workforce Trends in the United States

The U.S. economy has significantly improved since the recession. Multiple markets in the U.S. are very competitive due to strong employment gains and resulting talent demand. This is especially true for job gains in banking and IT services.

Several macroeconomic factors point to a tight supply of talent. As of July 2018, the U.S. unemployment rate held at 3.9 percent, 0.1 percentage point away from its post-WW II record low. For college graduates, the rate is even lower at 2.2 percent, according to U.S. Bureau of Labor Statistics (BLS) data. Meanwhile, the U.S. has the lowest labor force participation rate for men of the nations studied in this report. That means many people in the U.S. are simply not looking for work, further reducing the potential supply of talent, per the Organization for Economic Co-Operation and Development.

On the demand side, job openings in the U.S. continue to set record highs. Openings have risen approximately 16 percent between 2017 and 2018, with roughly 190,000 jobs added each month. That rate is 20,000 more jobs per month than during the previous year, and the rate of job openings hit its record in early 2018, according to the BLS. In fact, May 2018 marked the first time in U.S. history that the number of jobs exceeded the number of job seekers.

Not surprisingly, the demand for workers with functional skills is strong at all levels. All key occupational groups staffed by both traditional employees and contingent means have seen their unemployment rates drop in the past year, and unemployment rates for administrative/clerical and light industrial skills have set their all-time lows. Likewise, business and finance saw a significant plunge in unemployment, and unemployment in management positions, thought to be one of the most affected by Baby Boomer retirements, which the BLS reports is a mere 0.2 percentage points from its record low.

Industries adding jobs in the U.S. were not limited to high-level technology roles. Healthcare added the most jobs (368,000) followed by manufacturing (327,000), construction (308,000), and hotels and restaurants (236,000). Notably, manufacturing overtime is nearing all-time highs last seen around 1993. Job openings are also at near-record levels for retail, with employment up by 723,000 for traditional retail and up by 181,000 for non-store e-businesses. Meanwhile, employment in the arts and entertainment sector is up 460,000 since 2010, and restaurants are up a remarkable 2.6 million.

Several factors will continue to shape the U.S. job market. First, the U.S. remains in the midst of Baby Boomer retirements, an issue the U.S. Census Bureau says it will have to face for at least three to five more years. At the same time, the current political landscape leans toward protectionist policies, with crackdowns on illegal immigration and strict enforcement of H1B (immigration) laws, which will further limit the supply of available talent.

Workforce Trends in Canada

Canada has roughly 400,000 job openings that it needs to fill. That figure is three percent of all jobs the country has, and a skills mismatch is to blame. Trading Economics reports Canada’s unemployment rate is 5.8 percent, the lowest rate since 1976. Wages are rising to all-time highs, and both low- and high-end skills are being heavily recruited across industries.

Outside of Calgary, all markets have unemployment rates below the national average and declining over the year. Strong employment gains in a market increase competition, especially for job gains in professional and technical services, which consume a large quantity of highly skilled talent in fields such as IT and engineering. The industries adding the most jobs did not necessarily correspond with the ones with the highest skills shortage as reflected by vacancies. Instead, the data point to personal services, construction, and hospitality as the areas with the highest vacancy rates. The net result, combining jobs added and vacancy rates, is that employers are competing for talent across skill sets and industries.

Future articles will canvas economic and workforce data and trends in Europe and Asia-Pacific. Be sure to bookmark our blog so you don’t miss them.