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2021 Closed Out With Record Job Gains — Now What?
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Even though last year ended with a slower month of job creation than anticipated, the final numbers for 2021 still yielded plenty to celebrate. There will be millions of jobs added again in 2022, but don’t expect hiring and retention to be any easier than they were last year.
Looking at the final job numbers for last year, the U.S. added 199,000 jobs in December. The monthly job gain was less than half of economists’ expectations, but 2021 finished with a very strong total for the calendar year.
There were almost 6.6 million more jobs in December than the prior year based on non-seasonally adjusted figures, the largest total on record by more than 2 million going back to 1940. For context, the previous high was just over 4 million jobs added in 1978.
The gain represented a 4.6% increase in employment from the end of 2021. While the growth number was not a record, it was almost triple the pace experienced from 2010 to 2019, signaling how busy talent acquisition, HR professionals, and hiring managers were this past year.
In 2021, the financial activities industry was able to recoup all the jobs lost from the pandemic after adding 154,000 jobs throughout the year. Other industries posted big gains for the year, as well. The professional and business services sector added just over 1 million jobs; trade, transportation and utilities added 852,000 jobs; and construction added 153,000 jobs from December 2020 to December 2021.
The largest rebound was in the leisure and hospitality industry, as workers in restaurants, hotels, and entertainment venues were able to get back to work as social behaviors returned closer to normal in most of the country. The industry recouped over 2.5 million jobs, a growth rate of almost 20% from the end of 2020.
While that is terrific news, the industry still has 1.2 million fewer employees than in February 2020. The latest report of job openings and turnover showed 1.5 million open jobs in the industry.
The number of people voluntarily quitting their job hit another record at 4.5 million for the month of November. If it seems like you’ve read that line before in this column, it’s because the trend keeps heading in the wrong direction for those trying to retain talent. There were more than 46 million quits from November 2020 to November 2021. The level has increased in 14 of the past 19 months since the initial rebound of jobs began in May 2020. The latest number represents approximately 1 million more quits in a month than the average for 2019.
If the relative pace of quits from November continues, it will equate to a 36% voluntary turnover for the year. And that is the national number; some industries and states are experiencing higher volumes of quits. Keep in mind, though, people are usually quitting to take another job opportunity — often with higher pay or increased benefits — rather than leaving the labor force. Also, the number does not include layoffs or retirements.
In what is always an interesting study to read, U-Haul released its growth index that tracks the net gain in one-way trips of its trucks. It is a gauge for where people are moving, and given the dynamic of remote work likely playing a larger factor, this year’s version had some compelling trends.
It was not surprising to see Texas, Florida, and Tennessee in the top three spots given their typically strong migration patterns, but a few others near the top of the list made big jumps from 2020. Maine ranked 8 in 2021 after checking in at 29 in 2020. Idaho, which has been one of the leaders in recovering jobs, jumped from 30 in 2020 to 9 last year. New Mexico moved up from 39 to 10.
California ranked 50 with the most net losses. The report noted that while California’s losses were not as negative as 2020, the trend can “…partially be attributed to the fact that U-Haul simply ran out of inventory to meet customer and demand for outbound equipment.”
As we look at the trends for 2022, wage inflation is likely to remain a major disruptor to hiring and retention. Based on a recent study from LaborIQ, newly filled jobs in finance, technology, and human resources are expected to command an average premium of 10% or higher in 2022 relative to the median pay from 2021.
In other words, it is likely that when somebody switches a job in one of those fields, they could be looking at a double-digit pay increase. Most new jobs are commanding at least 7% increase in pay based on the current recommended salary. This trend poses an acute challenge to businesses that have to assess compensation in real-time to determine the competitive salaries that attract and retain talent.