The U.S. labor market is being transformed as we speak. Combined with the large rebound in overall foreign-born labor force, which hit an alltime high this past spring, the drop stands out dramatically. According to the Bureau of Labor Statistics (BLS), changing workforce demographics have created a critical need for skilled trades workers. This change comes as the unemployment rate remains flat, despite the fact that we are adding fewer jobs than in past years. Factors such as an aging workforce, a rise in discouraged job seekers, and reduced immigration flows are contributing to this complex labor landscape.
In the month of September 2024, the country created a staggering 240,000 new jobs. That impressive number actually matched the net gains from the last three months put together. This expansion was led largely by the healthcare sector, which has been a key driver of overall job growth this year. We know why that is—the hiring environment is the worst it’s been in more than a decade. This unfortunate trend has been spotlighted by Challenger, Gray & Christmas.
Decline of the Foreign-Born Labor Force
The foreign-born labor force has experienced an extraordinary recent collapse. Now that it’s started to fall from that peak in early 2024, the drop should worry everyone who cares about the evolving composition of the workforce. What accounts for the drop in foreign workers? A combination of deportations increases and immigration decreases.
Brett Ryan, a senior economist at Deutsche Bank, elaborated on the significance of these movements. He stated, “Last year, it probably took about 130,000 (jobs) per month to keep the unemployment rate steady. This year, it’s probably more like 50,000 or below.” This means we require a smaller total number of net new jobs created to maintain unemployment rates. It showcases the immense structural shifts occurring in the labor market.
That loss of foreign-born workers will affect a wide array of industries that have historically depended on immigrant labor. Industries can’t find enough qualified candidates. For continued economic stability and rebound, businesses will need to rethink their hiring processes and strategies.
Job Growth and Employment Trends
With these underlying challenges brought to light from recent data, the U.S. economy recorded its 240,000 th new job in September. This figure marks a significant increase and reflects a broader trend where healthcare has emerged as a leading contributor to job growth this year. Nela Richardson noted, “Health care has been one of the stalwarts of the labor market … the need for health care has grown as the population ages.”
Other metrics paint a much grimmer picture. As the Department of Labor recently pointed out, continuing jobless claims are at a four-year high. ADP estimated that private-sector businesses lost 32,000 jobs in September due to ongoing economic uncertainty and preliminary data revisions.
The hiring trends show that as some sectors are booming, many sectors are still falling behind. Back in August, we reported that a record 25.7% of unemployed Americans had been actively looking for work for at least 27 weeks. This statistic drives home how difficult it is for most people to find work in today’s economy.
Future Outlook and Economic Indicators
As businesses sink into the new realities of workforce competition, there may be a retrenching optimism around hiring expectations to come. Nicole Bachaud remarked, “All of these data points say that the majority of businesses plan to increase hiring in the next 12 months, which is encouraging.” This bullish outlook should help drive even more recovery in industries that were stifled by the recent boom-bust economic cycle.
External factors remain a concern. The absence of broad-based employment gains only serves to make the U.S. economy more fragile and worse equipped to deal with negative shocks. In short, as Abiel Reinhart explained, prolonged uncertainty might be a sign that deeper issues are at play in certain industries. This complexity speaks to the reality that companies must be flexible and agile in a changing marketplace.
The BLS was scheduled to release its September jobs report on a particular Friday at 8:30 a.m. ET. This was postponed due to a federal shutdown. Short time lags can inhibit attempts to analyze localized, real-time labor market conditions to make effective policy interventions.