Veritone Hire Sees CPA Drop As U.S. Labor Market Continues To Cool
The U.S. labor market is experiencing a notable shift, with a surplus of 1.6 million job openings over unemployed individuals, down significantly from the all-time peak of 6.2 million. With this gap continuing to narrow, Veritone Hire has seen a decrease in CPA by 8.4% and conversion rates increase by 8% through May.
Understanding the data discrepancy
In May 2024, the establishment survey reported an increase of 272,000 nonfarm payroll jobs, while the household survey indicated a contrasting loss of 408,000. The discrepancy between the establishment survey’s reported job gains and the household survey’s reported job losses stems from the differences in methodology and scope:
- Establishment survey: This survey focuses on nonfarm payroll employment, collecting data from businesses and government agencies. It measures the number of jobs, hours worked, and earnings for nonfarm employees, indicating a robust job gain of 272,000 in May 2024.
- Household Survey: This survey collects data from households and includes self-employed individuals, unpaid family workers, agricultural workers, and private household workers. It reported a loss of 408,000 jobs, reflecting broader employment categories and highlighting challenges faced by smaller independent sectors.
Takeaway for recruiters and employers
Recruiters should focus on the establishment survey when looking to understand trends in formal employment sectors, particularly for roles in large businesses in government agencies. This survey provides a clear picture of job growth and wage trends in nonfarm payroll employment.
On the other hand, the household survey is more relevant for recruiters targeting a broader range of employment types, including part-time positions, self-employed individuals, and workers in agriculture or private households. This survey offers insights into the overall employment landscape, including the availability of part-time and freelance workers. By understanding the strengths of each survey, recruiters can better tailor their strategies to the specific needs of their industries and target demographics.
Current economic context and labor market insights
Federal Reserve Chair Jerome Powell’s press conference on Wednesday, June 12th, provided crucial insights into the current economic landscape and labor market trends:
- Interest rates: Fed Funds Rate remains at 5.25% to 5.50%, with projections now calling for one rate cut in 2024, down from three rate cuts projected in March.
- Economic activity: The economy is expanding at a solid pace with GDP growth projected at 2.1% for 2024 and 2.0% for 2025 and 2026.
- Inflation: Showing incremental progres, with PCE expectations at 2.6% for 2024.
Labor Market Insights
- Supply and demand balance: The labor market continues to show a better balance between supply and demand. While still strong, the labor market is slowing, which is helping to ease nominal wage growth.
- Labor market conditions: Powell noted labor market conditions mirror pre-pandemic conditions describing the labor market as relatively tight, but not overheated.
- Unemployment projections: The unemployment rate is expected to rise slightly from 4.0% in 2024 to 4.2% by 2025.
- Part-time employment: A notable increase in part-time employment was observed, contributing to the complexity of the labor market dynamics
Labor market trends
The current U.S. labor market presents a complex picture. The ratio of job openings to unemployed individuals is at 1.24, indicating there are 1.24 open jobs per unemployed individual. This ratio, back to pre-pandemic highs, highlights that while the labor market is starting to cool, we are still in a historically tight market.
Opportunities and strategic insights
Certain sectors, such as healthcare and technology, are experiencing markedly different trends in job openings. Veritone Hire data reveals that healthcare jobs have only seen a modest reduction of 10%, whereas technology jobs have dropped significantly by 32% year-to-date. This contrast highlights the varying challenges across sectors, suggesting that while high-volume hiring remains robust in healthcare, the technology sector faces a substantial pullback. Employers must remain attentive to their industry’s dynamics to navigate these changes and attract top talent effectively.
This cooling labor market presents significant opportunities in the industries most impacted. With increasing unemployment in certain industries, a pool of skilled candidates is seeking new opportunities at a level that has not existed since 2021. Employers can capitalize on this by targeting their recruitment efforts to attract these high-quality hires, strengthening their workforce.
Further Reading:
Market Update: Implications of Inflation Trends and Rising Gig Economy Demand
Job Application Tracking in a Cookie-less World
Wolfpacks and Minesweepers: The Real-World Inspiration for Veritone Hire’s AI Algorithms
Sources:
https://data.bls.gov/cgi-bin/surveymost
https://fred.stlouisfed.org/series/JTSJOL
https://www.bls.gov/news.release/empsit.b.htm
https://www.bls.gov/news.release/empsit.a.htm
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240612.pdf