Webinar Recap: 2023 Employment Market Insights and 2024 Forecast
Recently, our CEO Masa Maruyama participated on a webinar panel hosted by Japanese employment staffing leader Pasona to discuss U.S. labor market insights from 2023 and predictions for 2024.
The session is available for view, but please note the entire discussion is in Japanese. So for those of you who prefer the insights in English, we’re written a summary that follows.
Introduction: 2023 unemployment and wage growth figures were strong
The employment market was robust, with the United States adding 200,000 new jobs, an increase from the typical 100,000-150,000 in recent years. The unemployment rate was at or below 4%. Reflecting this trend, wage growth remained above 4%, surpassing pre-pandemic figures of 2.5-3%.
Labor supply pains were acute in the first half, but began to ease
Especially in the first 180 days of 2023, the labor supply was tight. The presence of “job hoppers” seeking higher wages contributed to a low retention rate, likely exacerbating the existing labor shortage. Towards the latter part of the previous year, there was a gradual shift in the employment landscape. The economy began to mildly decelerate, prompting companies to adopt measures focused on enhancing productivity.
On the demand side of labor, there was a surge in post-pandemic pent-up demand, especially in sectors like entertainment and customer service, necessitating an increased workforce. Rapid growth in labor demand in manufacturing, transportation, retail, and wholesale industries due to the recovery of supply chains. On the supply side, there was a slow recovery of labor supply compared to demand due to factors like pandemic-induced surplus savings and delayed re-entry of immigrant labor.
2024 employment market outlook
Considering the current forecast of a mild economic slowdown in the U.S. economy in 2024, labor demand-supply dynamics are expected to ease further in 2024. Moreover, addressing skill gaps and enhancing productivity will remain crucial. The competition for high-skill workers will persist. With a focus on improving productivity, companies are likely to explore increased utilization of AI.
Challenges and opportunities for Japanese companies operating in the U.S.
For Japanese companies, transitioning from membership-based organizational structures to skill-based organizations poses a significant challenge and opportunity. In Japan, job rotation based on individuals rather than specific roles is a prevalent model. While this has benefits, such as specialized skill sets, it also makes the workforce more vulnerable to job fluctuations. Hence, the challenge lies in addressing and navigating through this vulnerability, possibly through effective tool adoption and data management.
Saison Technology’s recommendations for the current labor market
No matter if the 2024 economic forecasts are accurate or not, the labor market promises to be very dynamic in the next 12 months. This means that labor managers and finance chiefs must have all the data on their current workforce available in close to as real time as possible. Just as important as data is the ability to understand it, and that typically means visualizing it and analyzing it in dashboards. Saison Technology has considerable experience in helping companies integrate their most valuable data with ADP and other key enterprise platforms to find innovative and cost-efficient solutions for labor. Contact salesop@saison-technology-intl.com if you would like to discuss labor management strategies and how to optimize your human capital data.