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Employers are bolstering productivity via automation, process improvement, capital investment, and even artificial intelligence, allowing companies to replicate many tasks originally done by employees for a fraction of their cost.
Much of the current stagnation within today’s labor market can be attributed to a burgeoning skills gap between what employers need and what prospective employees have to offer. To understand where applicants are falling short, it is important to understand what kinds of skills employers are seeking. Every year, the U.S. Bureau of Labor Statistics develops estimates of employment growth over the next decade for more than 1,000 occupations. For 800 of those occupations, O*NET (the U.S. Labor Department’s Occupational Information Network) ranks the importance of 51 skill sets spanning cognitive, physical, psychomotor, and sensory abilities.
The chart below lists the top 10 skills required by the top quintile of occupations with the highest projected growth between 2023 and 2033. Out of 15 major skill groups encompassing 51 skills, four are represented within the top 10: speech recognition, verbal, reasoning, and visual abilities. But there is an even more significant commonality: Seven of 10 are considered to be cognitive skills. And that begs the question: Why are cognitive skills so important to employers?
At a time of skyrocketing labor costs, employers are learning to accomplish more without more workers. This means employers are bolstering productivity via automation, process improvement, capital investment, and even artificial intelligence, allowing companies to replicate many tasks originally done by employees for a fraction of the cost. But employees are still needed within this new labor market. Humans have the ability to leverage technology and automations to benefit their employers; for example, employees who can accomplish a task faster by programming automation tools. Or those who know what prompts to input into ChatGPT. Or even those who can effectively articulate the outputs from such software. These are the skills of the future which employers need but cannot get enough of.
While the rally in job seeker confidence shows a recent rise in optimism, many expect this to be a fleeting situation as the economic picture of what’s to come is still uncertain.
The ZipRecruiter Job Seeker Confidence Index recovered most of the losses recorded in the first quarter of the year, increasing to a value of 95.6, equivalent to the value seen in 4Q2024. While the index regained 3.1 points overall, improvements in job seeker confidence varied by region: The West (+6.6) and Northeast (+5.1) regions saw the greatest improvements in sentiment, with the South following behind at +2.9. The Midwest, however, experienced a slight dip in confidence (-0.1) from the first to second quarter.
Despite the overall rise in confidence, the index captures a disparity between job seekers’ current sentiment and future expectations. The present situation index gained 5.5 points (suggesting a stronger currently existing job market outlook) while the future expectations index dropped by 4.4 points, suggesting many job seekers could see this outlook as being on borrowed time.
Concerns that the labor market will further loosen are more validated by predictions that joblessness will increase further this year. In March, the Federal Reserve estimated the unemployment rate will end 2025 at 4.4%, while in May the ASA Economic and Staffing Forecast estimated it will increase to 4.7% by year end. While the rally in seeker confidence demonstrates a recent rise in optimism, many may expect this to be a fleeting situation as the economic picture of what’s to come still rests uneasy.
