Maskot | Digital vision | Getty Images
Employees are sour on the labor market, but that pessimism may be somewhat misplaced.
The Glassdoor Employee Confidence Index fell to its lowest level since 2016 in January, when the career site began tracking the metric, it said Monday. The index measures how employees feel about their employer's business prospects six months from now.
The decline suggests job security is a “prominent” concern, said Daniel Zhao, chief economist at Glassdoor. “It's a signal that workers are concerned heading into 2024,” he said.
Headlines about layoffs mask a “very robust” labor market
That deterioration is likely due to a wave of layoff announcements in recent weeks, Zhao said.
So far, major tech companies including Amazon, eBay, Google and Microsoft have announced job cuts in 2024. But it's not just technology. Others, such as BlackRock, Citigroup and Universal Music Group, also announced layoffs.
U.S.-based companies had planned about 722,000 job cuts in 2023, nearly double the number announced in 2022, according to Challenger, Gray & Christmas, an outplacement and executive coaching firm.
However, these recent headlines mask the strength in the labor market as a whole, economists said.
From an employee perspective, things are “not getting better,” said Mark Zandi, chief economist at Moody's Analytics.
Despite many layoffs in certain industries, such as technology, Zandi says job losses in the broader U.S. labor market continue to hover near historic lows, where they have been since spring 2021.
New unemployment insurance claims are in line with the pre-pandemic trend in 2019, which economists describe as a period of strong labor market. The unemployment rate has also been below 4% for two years.
When it comes to the average annual unemployment rate, 2023 was the sixth best year on record, trailing just a few years in the 50s and 60s, said Julia Pollak, chief economist at ZipRecruiter.
“Overall, it's still a very robust and resilient labor market,” Pollak said.
Outlook depends on your point of reference
While the Glassdoor index shows deteriorating confidence, other measures point to a rosier picture of the labor market and the US economy.
For example, according to the University of Michigan, consumer confidence rose 13% in January to the highest level since July 2021. Similarly, a Conference Board poll found that consumer optimism strengthened in December across all household ages and income levels.
Home prices and stock prices are at record highs and relatively speaking, “everyone has a job,” Zandi said.
More from Personal Finance:
Why worker pay increases will be smaller in 2024
Employees pay to receive part of their wages early
The 'haves and have nots' of the labor market
ZipRecruiter's Job Seeker Confidence Index also rose in the last two quarters of 2023, but remains down in early 2022.
Overall employee sentiment likely depends on their reference point, Pollak said.
For example, if workers compare the results to what was expected to happen in 2023 — a year when many economists had expected the U.S. to enter a recession — the recent labor market looks like “a miracle,” Pollak said.
However, workers are more likely to compare their current prospects with those of a year or two ago, a time when the job market was red hot and workers had record power to get better jobs and higher wages. Since then, “things have definitely cooled and slowed down,” Pollak said.
The only 'blemish' in the US economy
The Federal Reserve aggressively raised borrowing costs to cool the economy and labor market and ultimately curb persistently high inflation.
The inflation rate has dropped significantly from its pandemic-era peak. But the inflation episode has made consumer costs noticeably more expensive, especially for staples like food and rent, economists said.
“The only [economic] One blemish – and it is a big blemish – is that prices are much higher than they were two to three years ago,” Zandi said.
High pandemic-era inflation has eroded the average person's purchasing power in consecutive months for more than two years. While wage growth was at historic highs, workers' paychecks bought less.
But that trend has reversed: Wage growth now exceeds inflation for the average person, meaning workers' paychecks are rising again in proportion to the things they buy. If this trend continues, consumer confidence should gradually recover, Zandi said.
Don't miss these stories from DailyExpertNews: