Markets tolerate tight conditions today with the expectation that the Fed will ease them later and stabilize demand. If the Fed cannot clearly communicate its intentions, affirming a September cut or explaining its rationale for more of the same, it could stir panic within an economy already teetering on the edge.
This week will feature a deluge of critical economic datapoints, including Consumer Confidence, JOLTS Report, Employment Cost Index, Productivity numbers, as well as the Jobs Report. Yet, none are likely to be more singlehandedly consequential than the Fed’s decision on interest rates that will be reported Wednesday. It is widely expected that the Fed will elect to maintain interest rates at current levels; however, this particular meeting could see fireworks between committee hawks, who wish to maintain pressure on interest rates, and doves, who see labor market instability as more of a threat. Since the beginning of 2024, the Fed has been faced with a difficult task—projecting which would be the first to fall: inflation or the labor market.
The labor market has, quite remarkably, resisted monetary policy pressure for months; however, its resilience was never sustainable long-term. Since February, nonfarm payrolls have been increasingly concentrated within fewer sectors, while the unemployment rate has risen by one percentage point for the last three months. Meanwhile, inflation has regressed toward the Fed’s 2% target, yet this progress has slowed due to lopsided supply-and-demand levels within the housing market and persistent labor cost growth within core services. If the momentum of unemployment and inflation over the last six months was to remain unchanged, unemployment would drift well above optimal levels (not seen since late 2021), while inflation would still trend just above the Fed’s 2% target.
Last week’s gross domestic product (GDP) numbers will likely push the Fed to maintain a hawkish disposition on interest rates, but the committee will have to provide clear forward guidance regarding next steps. Markets tolerate tight conditions today with the expectation that the Fed will ease them later and stabilize demand. If the Fed cannot clearly communicate its intentions, affirming a September cut or explaining its rationale for more of the same, it could stir panic within an economy already teetering on the edge.
Turnover is important for a healthy staffing industry, but staffing firms should analyze turnover data to assess where their efforts are most effectively allocated when finding potential talent and determining what factors might motivate different generations.
Staffing employment has steadily decreased since the caffeine kick that catapulted the industry to historic levels in 2022. This decline and then bottoming out (as seen in this year’s ASA Staffing Index data) has much to do with falling labor turnover rates as workers stay put at their current jobs for one reason or another. Lower turnover means fewer temporary employees, as potential talent is less amicable to accepting temporary or contract work. The Employee Retention Index from Eagle Hill Consulting does indeed show slowing labor churn (the index reached a new peak value of 105 in 2Q 2024).
Workers were asked about their confidence in factors that affect organizational attrition, including culture, compensation, and job market opportunities. Employee satisfaction with compensation was the strongest contributor to retention in Q2, followed by satisfaction with company culture, and in last place by job market opportunity—suggesting that workers are staying put because they are both content with the benefits they are currently receiving and because they are not very optimistic about their chances in the labor market. Gen Z workers record the highest confidence in their ability to find an opportunity in the labor market, but, despite some perceptions that Gen Z have unreasonable compensation demands, it is Gen X and Baby Boomers who are the least satisfied with their current compensation.
Staffing companies should realize that turnover is on the decline as workers choose to stay put. Turnover is important for a healthy staffing industry, but staffing firms should analyze turnover data to assess where their efforts are most effectively allocated when finding potential talent and determining what factors might motivate different generations. Overall, Gen X has the lowest retention value and, thus, the highest predicted turnover rate. Gen Z feels the best about finding a new opportunity and may be more agreeable to temporary work if the right motivators are found. Baby Boomers have the highest retention value, but many may be able to be recruited if their pain point of inadequate compensation is addressed.
