Following a turbulent year as a result of the global pandemic, the US workforce is finally showing positive signs of bouncing back. While the US unemployment rate peaked at 14.8% in April 2020, it has since decreased to 6.1%, according to the latest Bureau of Labor Statistics data. To provide a unique, in-depth view of the post-pandemic US labor market road to recovery, we developed the Randstad RiseSmart Labor Market Barometer, which aggregates 10 key labor macro indicators using statistical computations into a single, monthly figure.
Based on the latest labor market data, the April 2021 barometer figure increased 17.5 points from the pandemic low of 88.8 in April 2020, indicating clear signs of improvement one year after the COVID-19 pandemic first significantly impacted the labor market. For perspective, the barometer has a baseline figure of 100, marked by the initial pandemic outbreak in March 2020.
about the randstad risesmart labor market barometer
There are countless aspects to a labor market as complex as that of the US, including hiring, layoffs, wages, labor supply, skills mismatch, and more. For each aspect, there are many variables such as jobless claims, average hourly earnings, unemployment rate, weekly hours and job gains, among others.
The objective of the Randstad RiseSmart Labor Market Barometer is to consolidate these disparate signals into a single index. The barometer is built upon ten key indicators strategically chosen to reflect various aspects of the overall labor market, with the resulting value representing the pulse of the US labor market.
RiseSmart uses a principal component analysis (PCA)-based statistical model to determine the monthly barometer figure. The 10 labor market indicators aggregated into this barometer provide a comprehensive view of unemployment rolls and claims, layoffs, predictive workforce reductions and hiring activity. The indicators include:
- Unemployment level: number of people who are not employed, who are available for work, and those who made specific efforts to find a job during a four-week period or have been temporarily laid off.
- Unemployment rate: number of unemployed people as a percentage of the labor force.
- Temporary help services: number of employees in the ‘temporary help’ services industry.
- Initial claims 4-WMA: number of new jobless claims filed by individuals seeking to receive unemployment benefits.
- ASA staffing index: weekly changes in temporary and contract employment, which serves as an indicator of current economic conditions.
- Employment diffusion index: percentage of industries that have increased their payrolls in the past month (greater than 50% shows industries increased their workforce; less than 50% shows industries reduced their workforce).
- Layoffs and discharges: number of involuntary separations initiated by employers (layoffs with no intent to rehire; discharges because of eliminated positions).
- ISM Index percentage reporting lower volumes in services: shows if companies in the services sector plan to decrease their workforce.
- ISM Index percentage reporting lower volumes in manufacturing: shows if companies in the services sector plan to decrease their workforce.
- Google searches (unemployment topic): shows search trends on Google (in this case for unemployment-related searches).
Our workforce and career mobility insights also show the latest data related to US job transitions, as well as key labor market indicators broken down by state. See the Randstad RiseSmart Labor Market Barometer and read our monthly report for additional insight into the April 2021 barometer figure.
survey offers further insight from HR professionals and individual employees
In addition to leveraging the latest labor market data, we also surveyed both HR professionals and individual employees for their point of view on workforce recovery. Specifically, our ‘Career Mobility Outlook’ report covers employer and employee perspectives on key aspects of the workforce such as economic sentiment, recruitment trends and job transition behavior. Below, we’ve highlighted some key findings and takeaways from the survey.
most employers plan to hire in the coming months
The ‘Career Mobility Outlook’ report found that twice as many employers (51%) feel more optimistic about the overall US economic outlook than do employees (24%). Additionally, of the HR professionals surveyed, 87% of plan to hire in the next three months, which is a positive sign of continued labor market recovery. In comparison, a RiseSmart COVID-19 employer survey conducted in May 2020 found that 47% of companies that had already reduced their workforce at the time indicated they were likely to make additional cuts to their workforces, in anticipation of continued business contraction.
According to the ‘Career Mobility Outlook’ report, 71% of companies surveyed plan to tap into internal hires for at least 10% of open roles. However, only 31% of organizations plan to fill more than one quarter of their open roles through internal hiring.
As hiring picks back up across industries, employers will face increasing competition for qualified job seekers. Instead of relying primarily on outside talent, employers can make open roles available to current employees. According to data from Josh Bersin, it can cost up to six times as much to hire externally rather than build talent from within an organization. Tapping into current employees to fill open roles can significantly reduce hiring and onboarding costs.
In addition to decreased costs, internal mobility also offers organizations a variety of benefits: reduced time to fill open positions, faster time to productivity for new hires, higher retention and improved employee engagement.
employers and employees don’t see eye-to-eye on internal mobility opportunities
Based on the survey results, employers are more optimistic about the availability of internal mobility opportunities at their current organization in the coming months (62%), compared with employees (51%). Additionally, only about half (52%) of employees surveyed have a positive outlook on their current manager’s openness to moving internally, while employers are more optimistic about this matter (73%).
To enable true internal mobility and drive business agility as a result, it’s important to create a culture that encourages talent sharing across all levels and departments at an organization. This includes helping managers recognize the value of making talent visible and mobile throughout the organization – through such opportunities as promotions, lateral moves to other teams, stretch assignments and cross-functional team projects.
According to the 2019 Deloitte Human Capital Trends Survey, 46% of HR leaders indicated that current managers’ resistance to internal moves as a top roadblock. This attitude prevents employees from keeping their skills relevant and reaching their full potential. It can hold an organization back from futureproofing its workforce. The Deloitte survey found that 70% of HR leaders believe that the culture around talent sharing is either inadequate or fair at their organization.
One way to hold mangers accountable to meeting these expectations, as highlighted in the Deloitte survey, is to rethink how managers’ performance is measured. For example, rather than only rewarding managers for producing business results, success can also be measured based on promoting internal mobility and making a commitment to encouraging all team members to develop new skills. In addition, companies that promote ongoing career development and skilling develop strong internal talent pipelines. A manager is much more likely to support a member of their team who wants to move to another role if the manager is confident there are others who can readily fill the position.
related content: randstad risesmart global survey reveals need for democratized skilling.
While a manager might think they're 'losing’ a top performer when they move to another part of the organization, a culture of talent sharing and continuous skill building also enables these managers to access talent with relevant skills they might not have otherwise known were available. This talent-sharing mindset is in everyone’s best interest – it helps ensure employees’ skills and passions align with larger business goals, while simultaneously driving employee engagement and retention. According to recent data from Prudential Financial, of employees who are planning to look for a new job in 2021, ‘mobility opportunities’ rank as a top factor that would encourage them to stay with their current employer.
The global pandemic has had a significant impact on organizations across industries. In fact, as Microsoft CEO, Satya Nadella, notably said in April 2020 following the initial pandemic outbreak, ‘We’ve faced two years of digital transformation in two months.’ Over the past year, further digital transformation and other disruptions have led organizations to rethink the roles and skills they need to drive long-term business success. As the US labor market continues to improve, the Randstad RiseSmart Labor Market Barometer and accompanying report will be updated on a monthly basis to provide a unique look into the road to recovery. Additionally, the quarterly ‘Career Mobility Outlook’ report will continue to highlight where employers and employees are aligned on crucial workplace topics, as well as noticeable disconnects.