Significantly beating analyst expectations, the labor market represents the resiliency of the U.S. economy.

Once again, it seems the labor market is a beast that cannot be tamed – not by recession expectations, not by the highest interest rates in over twenty years, nor by inflationary pressures.[i]

U.S. employers added 353,000 new jobs in January, followed by the BLS’s revising their added-jobs number for December from 216,000 to 333,000. Whereas the industry mainstays for adding jobs have historically been government, healthcare, and leisure & hospitality, even manufacturing and retail got a boost.

Introducing The Great Gully

Many in the media are saying “The Great Resignation” is over…though maybe “the great gully” will drive attention to the real culprit here. The report cited above noted that one reason given for the constant hiring in healthcare is “the aging population”. Last year I consulted with the Census Bureau by initially asking that with all of the baby boomers on track to retire or having already done so, how many net new workers will enter the workforce going forward. The answer is very few. Specifically, a net change of just 3.7 million more workers will join the U.S. workforce during this decade. Then the Census Bureau disclosed that their projection was done prior to COVID-19 for which fed chair Jerome Powell said caused us to lose 3.5 million workers. That’s leaves a net addition of just 200,000 workers for this decade. And more than that number are changing jobs each month. Yikes.

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Further Reading: The Labor Shortage Wake-Up Chart is Here

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Doing The Math on Jobs Report

So we know our economy added just short of 700,000 jobs in the two-month period of December and January. Given that our unemployment rate is low…3.7%…and there are few new entrants into our workforce, it’s a cinch to conclude that the great majority of those 700,000 new workers were actually job-changers, that they left one job for another job. And those workers can easily change jobs not only because they can job-search during their workdays on the computer you gave them, but there remain a full 9 million open jobs across our country. For comparison, that is about one-third more open jobs than we had just prior to the pandemic. And since then we’ve lost the 3.5 million workers as mentioned above plus we’ve seen a downward plunge in new workers entering our economy.

Media Reports of Layoffs Don’t Impact Your Business

Media outlets search for any alarming data to gain your attention so layoffs are red meat for them. But while tech companies and others are occasionally shedding workers, the actual number of workers being laid off and the resulting overall percentage that is exiting our workforce are not alarming. BLS data has been telling us since the pandemic that exits of any kind are at all-time lows.

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Further Reading: Is Recruiting Today a Doom Loop for Tomorrow’s Turnover?

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Back to Dogs-Chasing-Tails

Never has employee retention mattered more. Beyond the obvious reasons, consider that top performers out-perform average performers by 4 to 1.[ii] Chewing on that for a moment, one first realizes that all employees are not equal. But during these dog-chase-tail times, retaining even your average workers versus having to dip into the highly competitive recruiting pool makes more sense than continuously playing in the doom loop of recruit/train/do exit interviews and then start over.

Should you wish to learn a research-based way to cut employee turnover, start here, then email me if you’d like to learn specific ideas and results for cutting turnover in your industry, dfinnegan@c-suiteanalytics.com.

[i] https://www.shrm.org/topics-tools/news/talent-acquisition/bls-hr-jobs-unemployment-feb-2024?utm_source=marketo&utm_medium=email&utm_campaign=editorial~Talent~NL_2024-02-07_Talent-Acquisition&linktext=Job-Growth-Explodes-in-January&mktoid=49296740&mkt_tok=ODIzLVRXUy05ODQAAAGRI75-cvvBeJPT21xjAkczzmlbwyrtq9mWP3TCJeg80Eu59_xB4yPlSDjXJu5jyD5V81p36IJ-ReGWDnXHIX2ZePGJCrBZSIE13hmoAitTu4wtymGw

[ii] I learned this and other retention-related research when collaborating with an industrial/organizational professor several years ago.

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Energy was high throughout the presentation, culminating in a rare standing ovation. The reason for their enthusiasm became clear in their post-session comments, that these are the people whose work piles up because of turnover.

And I think it goes one step further in that they know which managers retain talent, which ones don’t, and not coincidentally which managers cannot build trust.

During the presentation I polled the group on critical topics like Does your company set engagement goals? Are managers accountable for retention? Does your CEO know the cost of your turnover versus just a percent? Does your top team find comfort in being even with benchmarks when benchmarks usually represent being mediocre? The answers were representative of most HR groups, that about 20 said their companies were doing the right thing from a total of 300.

I asked the group too if exit interviews were effective, if they had helped their companies perform better. Three of 300 said yes, one solid percent, adding to my cumulative poll that now has reached 7,800 HR representatives with a total now of 18 saying yes.

With unemployment reaching just 5% last week, I sympathize with each recruiter who receives one more requisition to fill. This group’s message was clear: Reducing employee turnover will reduce their turnover, too!

SHRM published an article about this presentation’s content in advance of the conference. You can read this article on SHRM.org. 

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