- On April 28, 2022
While the unemployment rate has been falling for months, the labor force participation rate has barely budged. Wages are rising, but not enough to offset other economic aspects. Job openings are above pre-pandemic levels but employers are struggling to find qualified workers. Most of those trends as well as a few others are expected to linger into at least the first half of 2022, but forecasting predicts if some factors are under control, labor supply will start to normalize later this year.
Economists are hopeful that if various factors remain under control, the labor supply will start to normalize later this year. Data provided by government agencies showed employers adding an estimated 433,000 workers at the end of 2021; meanwhile, the labor force participation rate was forecast to tick up to 61.9%. Currently, the Bureau of Labor and Statistics has proven data and was close to those estimates made back in 2021, but current trends for this year are still showing promise. There are several aspects to be considered when estimating, and this is the current projection for the job market in 2022.
The labor force participation rate was mostly stagnant in 2021. While some of the factors that have been keeping Americans from re-entering in the job market could still be valid in 2022, concerns about changes in the economy and national affairs will continue to hold back many job seekers. Child care responsibilities is the second reason people refrain from seeking a job. Another reason for a slow recovery in participation is many older Americans have retired over the last two years. This means a measurable section of workers may not return to the job market, and there will be an imbalance of jobs to seekers.
Current data and trends anticipate solid payroll growth for 2022, specifically in leisure and hospitality, health care and education, as those sectors have the most room to make up in the labor market. Those are also the industries most impacted by factors that affect the data and trends calculated and reported. With job openings expected to remain elevated due to the high demand for labor, Americans who are actively looking for work are expected to find jobs in a timely manner. As more people move into private-sector jobs, the unemployment rate is likely to fall below the Federal Reserve’s “estimate of a full-employment economy” by early this year as stated by economists.
Strong demand for workers, along with the current need for workers, resulted in wage increases this previous year. While the pace of wage growth may start to peak if more Americans enter the labor force this year, workers are expected to maintain much of the bargaining power they had over the last 12 months, especially with inflation growing due to several impacting factors.
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