Last week, Florida Tax Control (FTW) published “Labor Market Data Indicates a Cool-Down: Could Florida’s Workforce Experience a Cold Summer?” in favor of employers and, ultimately, neutralize. The commentary also explores how this change could affect Florida’s highly reactive economy.
Florida TaxWatch President and CEO Dominic Calabro intervened in the comment.
“COVID-19 put significant pressure on employers as they worked to fill more open positions with fewer applicants, forcing them to offer greater flexibility and monetary incentives just to attract the same quality candidates they had before the pandemic. But now, for the first time since 2021, job postings across the country have fallen below 10 million, signaling a tipping point and hopefully an eventual rebalancing of the scales,” he said. “This trend, coupled with stubbornly low unemployment, should allow employers across the country to regain some leverage over job seekers in hiring negotiations. And if these employers can attract and retain employees without offering excessive monetary incentives, consumers will begin to see those savings reflected in the price of goods and services.
“In Florida, this is particularly promising because statewide job growth outpaces national growth by 4.5 percent, and the unemployment rate falls below the national rate by 2.6 percent. However, the steady influx of retirees and an aging population pose an imminent threat to that progress. Fulfilling our role as a taxpayer research institute, Florida TaxWatch will continue to monitor labor market dynamics, across the US and here at home, and the effect on both employers and employees,” added Calabro.
According to the FTW, the labor market is considered “hot” when there is high and unsatisfied labor demand, and “cooling” occurs when labor demand and hiring begin to decline. National job vacancies hit a recent low at the end of February 2023 (9.97 million), indicating a slowdown in labor demand, but that trend has not been consistent across all industries. For example, from March to April 2023, the leisure and hospitality industry gained 154,000 new employees, while employment in the industry decreased by 38,000.
At this time, conditions remain favorable for employees because, as outlined in the FTW’s August 2022 Florida Workforce Update, quit rates, or the number of employees who leave a job on their own will as a percentage of total employment, have not yet fallen to pre-pandemic levels. They’re hovering around 2.6 percent nationally, and in Florida they’re hovering at 3 percent.
Going forward, though, the FTW suggests employers may regain some leverage if job openings and wage growth continue to slow. The relationship between job vacancies and unemployment can be used to assess this leverage. To illustrate, in February 2023, there was one person unemployed in the US for every 1.7 job openings, a decrease from 1.9 in January 2023.
In Florida, labor market conditions have remained relatively “warm,” with an estimated 2.5 job vacancies reported for every unemployed person in the state. While the state was recently recognized as having the highest economic performance nationally, making it a desirable location for both individuals and businesses looking to relocate, labor shortages may persist. Many older residents are not joining or will soon be out of the workforce, which is a concern for employers looking to hire for their growing businesses.
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