Marketplace - Who’s still hiring?

Episode Date: September 4, 2024

The job market is the tightest it’s been in over three years — but don’t freak out. There are still more open positions than there are job seekers right now. But some experts are stressing about what the labor market may look like in a few months. Would potential interest rate cuts influence job creation in 2025? Also in this episode: The services sector is looking better than manufacturing, U.S. war stockpiles have climate-friendly uses and we check in with a former restaurateur who pivoted to consulting.

Today, we'll talk jobs and hone in on a sector of the economy that makes up many, if not most, of them. From American public media, this is Marketplace. In New York, I'm Kristin Schwab in for Keiristal. It's Wednesday, September 4th. Good to have you with us. The economic data of the week will be the August jobs report out on Friday because it will give us a clue as to how well the Federal Reserve has been balancing its two mandates, stable prices and maximum employment. As we wait for that big number, we can take a hint from some smaller ones along the way. Today, that's the job openings and labor turnover survey. The Bureau of Labor Statistics says in July, openings fell more than expected,

to about 7.7 million. That's the lowest we've seen since the beginning of 2021, which, for context, was a pretty good time for the job market. And for more context, 7.7 million job openings, it means, statistically speaking, there's a job out there for every person looking for one. Yet, economists are concerned. Marketplace's Kaylee Wells explains why. KS The economists are less concerned about the job seekers of today and more concerned about those looking in the fall or early next year. BD If this trend continues, we're going to start falling short of full employment. seekers of today and more concerned about those looking in the fall or early next year. If this trend continues, we're going to start falling short of full employment.

Preston Moy is a senior economist of the advocacy think tank Employ America. He says the number of openings is less of a problem than the downward trend itself because it means worse numbers are likely ahead. The thing that was quite dramatic this month was that the drop in the job openings rate was relatively stark, but I think you had to take that particular change with a grain of salt. Because the job openings number is more volatile. Moi is more concerned about people accepting and leaving jobs.

So is Guy Berger, who is Director of Economic Research at the Burning Glass Institute. If fewer people are being hired, that tells us more about your prospects looking for a job number of openings that there are. And while hiring rates bounced back after last month's plummet, the long-term trend is still down. The number of people choosing to leave their jobs is down too. So essentially it's like everybody is kind of frozen in place. And the freeze is intensifying since hiring is still

coming down. A cooler jobs report this week means the Fed's decision to lower interest rates is all but certain. The question now becomes just how big the likely drop will be. Hopefully it's not too little too late. Andy Challenger is senior vice president at the outplacement firm Challenger Gray and Christmas. He says the Fed's actions now

won't kick in right away. The labor market takes some time to ramp up and ramp down and so just a small change in the interest rate this month might not have an effect on slowing the cooling down for four, five, six months. Traditionally, the Fed does choose small, cautious rate changes. If they do that again this month, it could take longer for the cooling job market to turn around. I'm Kayley Wells for Marketplace. Wall Street today was a mixed bag. We'll have the details when we do the numbers. Yesterday, we told you about some sour news coming from the manufacturing sector. The

Institute for Supply Management reported that manufacturing contracted for the fifth month in a row. Tomorrow, the ISM will put out its latest survey on the services sector. And compared to manufacturing, the news there has been sweeter. It's expanded in 47 of the last 50 months. Now, the services sector, it's a massive category. We're talking local restaurants and laundromats to accounting firms and construction companies. So Marketplace's Justin Ho called up a few businesses in that sector to get a more detailed picture on how services are doing. The last few years have been pretty busy for Jess Harrington's business in the Boston area. Jess Finest is a home staging company that fancies up houses for sale with furniture,

paint, and lighting. Harrington says when people are having trouble selling their homes, that's when my phone's ringing a lot. It's like, okay, we've got to pull this listing. It hasn't sold. We're going to relaunch it. We need to rebrand it. Now that mortgage rates have been coming off their recent highs and more people are shopping for homes, Harrington says things have gotten even busier, especially with fall on the way. There's a big fall market rush right after Labor Day. We're getting all of these homes ready, photographs. I think we did six stages this week, six stages last week.

As a result, Harrington says she's trying to expand her business to be able to move and store more furniture. I am about to purchase my first box truck. I've been renting one. I brought three full-time movers on at the beginning of the year. I'm kind of running a little bit short on warehouse space, so that's a little bit of a limit to growth. Some businesses in the service sector

haven't had such steady work over the last few years. Heather Whaling runs a marketing company in Ohio called Geben Communication. It helps other businesses with public relations, digital marketing, and content creation. Whaling says last year was the worst in her company's history. A lot of her clients were worried

about a possible recession. But this year? We are on track to close more new business than any other year. Our client retention rates are the strongest we've ever seen, and all the financial success metrics are outperforming our projections. Whaling says one reason is that a lot of her clients are more optimistic about the economy

and more willing to spend on marketing. But Whaling also credits a big change she made to the structure of her business. She merged her PR, digital, and content departments to help her clients more easily sign up for multiple services. As a result? You know, clients are asking us to spend more time working on their communication, and so then that translates into additional revenue from a business side. Whaling says she could do that because her additional revenue from a business side. Whaling says she could do that because her business doesn't sell physical products.

If I was a different type of industry and sitting on all of this inventory that I couldn't move, then I would not be able to pivot as quickly based on what I'm seeing in the market. A lot of service sector businesses are taking steps to ensure they continue to do well. Tiffany Turner is the CEO of Adrift Hospitality, which operates hotels and restaurants on the Oregon and Washington coasts. Like a lot of Heather Whaling's clients, Turner's been spending more on marketing to convince travelers to come visit. In 2020, 2021, and even into 2022, you know, people didn't want to get on airplanes.

Now people want to get on airplanes. Now, people want to get on airplanes pretty clear. And so we have to draw them to our destination. Turner's also been trying to ensure she can hang on to her nearly 180 employees, especially since the labor market's been tight over the last few years. Turner says she's been focusing on company parties, flexible holiday policies, even a month-long sabbatical available to workers who've been there at least seven years. The people who have taken advantage of that, we implemented it a year and a half ago,

have really enjoyed it, and we have quite a few that are able to take advantage of it this year. Turner says keeping your employees happy can help her control costs. Turner would have cost a lot of money. So, creating jobs that are mostly enjoyable and mostly doable where people can have work-life balance and want to continue to work for our company actually creates efficiency.

Right now, that's an issue on the minds of a lot of businesses in the service sector, which employs almost 90% of all workers in the U.S. I'm Justin Ho for Marketplace. No matter the economic issue on your mind, David Brancaccio and the Marketplace Morning Report team have you covered. With all the news you need to start your day, give them a listen. Sticking with the theme of the services economy, last fall I reported on some businesses that managed to survive the toughest part of the pandemic,. Last fall, I reported on some businesses that managed to survive the toughest part of the pandemic, only to shut their doors a few years later. One of the owners I spoke with was Alexis Percival in New York City. She'd closed

the Italian restaurant she co-owned and shifted her attention to focus on a wine bar called Ruffian. We called her up to see how things have been going. Alexis, great to talk to you almost a year later. Yes, I know. I can't believe it's been a year. Okay. So when we last met, you were running Ruffian in New York City. What are you up to these days? I was helping to run Ruffian in the city and I had also just closed our second restaurant, Kindred, which is a sister restaurant also in the East Village. And so I was coming out of actively operating day to day and in the transition

period of moving into restaurant consulting, which is what I'm doing now. What made you make that change to take on this consulting work instead? Well, honestly, it was already in the works in the sense that when we opened Kindred in 2019, I really shifted my focus over there to spread, you know, our just administrative and like restaurant building reach. And when we closed Kindred two years ago, it was almost exactly two years ago right it was almost exactly two years ago right now, it made sense for me to just branch out and seek other things. And honestly, I was really burnt out from the floor shifts and coming out of the pandemic. And I just,

I really needed to be the captain of my own time and kind of control my own work for a while. Yeah. So now you're working with other restaurants to help them manage their business. What are some issues, are there any common issues that you're seeing pop up? Oh yeah. I mean, from New York to Texas, a restaurant is a restaurant, a bar is a bar, same cast of characters, same problems. But in terms of what I experienced in the last few years in New York and now, witnessing is, I mean, staffing and labor is still an issue. Nicole Sarris So, yeah, still. And now this many years after,

you know what you might call like a sort of a crisis moment. It's hard to say. I think there has been a bit of a reckoning of how hard restaurant work is. And I think there's also people like me who maybe are like, I love the work, but I need to stay in this industry in a different way. Do you think some of those bullet points you've mentioned about labor or just how hard it is to stay in that business, has it influenced at all what restaurants are doing, what kinds of new restaurants are opening? I don't know, I just wonder how it's changed the scene. Oh, yeah. Yeah. I don't know if you've seen across the city, I'm sure a lot of New Yorkers

would notice this, there's just this massive proliferation of, or it feels like it anyway, of pizza spots and burger joints. And there's a very real reason for that. They're proven models, but they're also proven profit models. You don't need a finicky chef in the kitchen to make a good pie. And you don't need as much front of house staff in order to run those kind of operations. And so they're much slimmer, they're much more focused, and therefore, able to turn a profit more easily.

They also require less rental space to operate for the most part. Nicole Soule-Pierre Last question is, how do you think the industry compares to what it was a year ago? Um, it seems to be better. When I look around New York, it doesn't look as much like there was a huge gap of time of closed and boarded up buildings. It does feel like it's starting to normalize. Now, this is anecdotal, of course. I don't have the labor statistics behind it, but from what I'm seeing in the spaces that I'm working in and just walking around and absorbing and my friends' businesses and restaurants, that's what it feels like. It does feel like

it's normalizing and in a positive way. Yeah. It's crazy to say the word normalize this many years later. Yeah. And to be clear, I do want to throw that in there that it absolutely isn't normalized in the sense that people should understand that the employee retention credits still haven't been distributed for some businesses, including my own, and that was from the IRS. So businesses that were in the hole coming out of the pandemic are still very much in the hole. So it can feel like old news, but it's actually very, very current news for small business owners. Nicole Corsette Alexis Percival is a restaurant consultant

in New York City and beyond. Alexis, thanks so much for catching up. Alexis Percival Thank you so much. Great to talk. Coming up... National refers to the people and domestic refers to the area. It sounds a bit potato-potato right now, but don't worry, we'll break it down. First, let's do the numbers. The Dow Jones Industrial Average rose 38 points, 1 tenth percent, to close at 40,974. The Nasdaq lost 52 points, 3 tenths percent, to finish at 17,084. And the S&P 500 shed 8 points, 2 tenths percent, to end at 5520.

We heard from Kaylee Wells that job openings are lower than they have been since January of 2021. In some human resources stocks, Cornferry gained almost one tenth percent, Manpower Group grew eight tenths percent, and ADP lost one-tenth percent. Verizon is currently negotiating to buy Frontier Communications Parent Inc., first reported by the Wall Street Journal today. Frontier dialed up more than 38 percent, Verizon plummeted almost three-and-four-tenths percent, rival Comcast dropped two-and-one-tenth percent. Bonds rose, the yield on the 10-year T-note fell to 3.76 percent.

You're listening to Marketplace. Some of the toughest moments we'll experience in life often come with the hardest financial decisions. Like how much to spend when your pet is dying. Or what to do if you uncover a loved one's financial secrets after they've passed. It's like having this albatross, this monkey on your back that you don't want amongst everything else. I'm Rima Chreis, host of This Is Uncomfortable, a podcast from Marketplace. This season, we've got a wide range of stories about life and how money messes with it, including the unexpected ways money can shape

our journeys through loss and grief. Listen to This Is Uncomfortable wherever you get your podcasts. This is Marketplace. I'm Kristin Schwab. We're all familiar with the concept of stockpiling. You gather a bunch of necessities ahead of a hurricane or winter storm. Well, the government, it stockpiles in case of an emergency too. There's its stash of crude oil that helps buffer supply shocks after, say, a global pandemic. The federal government has actually been refilling that reserve for about a year now after selling some of the supply. There's also something called the National Defense Stockpile, managed by the Pentagon. It's basically just a bunch of commodity metals sitting around in warehouses all over

the country. Marketplace's Daniel Ackerman looks into how the stockpile started and why it might come in handy. The military has kept some extra metals and other materials lying around since the 1930s. Tungsten for ammunition, cobalt for aircraft fuselages, mercury for artillery fuses, and a bunch more. But it was during the Cold War in the 1950s when the stockpiling started to look more like hoarding, says Morgan Bazilian, a professor of public policy at the Colorado School of Mines. The amount of money and the amount of materials that were included in the stockpile skyrocketed. From around a billion dollars worth of today's dollars in 1939 to... Something on the order of 30 to 40 billion.

The government thought that's what it would need in a hot war with the Soviets. If we are attacked, everything that helped build this nation will be channeled into the effort to sustain and rebuild it. The military flexed its preparedness in reel after reel of PSAs slash propaganda. Many special items that would be critically needed in a national disaster are being stockpiled by the federal government. But Cold War tensions eased, and so did the threat of attack on US soil. The National Defense Stockpile

became largely excess inventory, which any business owner will tell you is inefficient. And so... A significant amount of stockpile inventory was sold off. Julie Kelly is a researcher at the Institute for Defense Analysis. It essentially brought the program back to pre-World War II levels. And that's essentially where we find the stockpile

program today. About a billion dollars worth of materials stored across six depots nationwide. But in 2022, the Biden administration proposed building the national defense stockpile up again, and not just for military purposes. Juliette Kayyem was Assistant Secretary for Homeland Security in the Obama administration. When you actually look at our threat environment right now, one of the largest threats on the homeland, it's not conventional war, it's not even, say, foreign terrorism, it is going to be climate disruptions. To make sure flooding, heat waves, and other climate disruptions don't get any worse, the U.S. energy system is undergoing a massive facelift in the form of solar panels, wind

turbines, and electric cars. In other words, says Morgan Bazillion of the Colorado School of Mines, we're building lots of new stuff. Modern energy systems are going to be very metal and mineral heavy. And a bunch of those metals and minerals are part of the defense stockpile program. Bazillion says among the materials that could be used for either defense or energy are lithium, nickel, and graphite. Those markets are not nearly as mature as the oil market. They're small, volatile, and largely controlled by firms in China, which has put some export

restrictions in place. Plus, Bazillion says mineral pricing remains a huge source of uncertainty for the energy sector, especially compared to old reliable oil. You can go on your phone right now and you can tell me what the price is of oil in the North Sea of Europe in 10 seconds. You cannot do that. If I gave you the same exercise for graphite, you would have to ask me 20 follow on questions. Synthetic or natural? What flake size do you want? What currency are we going to do this deal in? Bazillion says equipping the national defense stockpile to supply the private sector when the materials aren't needed for defense could make it easier for energy developers to

buy what they need and get projects built. By adding another market player who is simply seeking better transparency and that transparency will be good for commercial reasons and it will also be good for security reasons. And good for the climate. I'm Daniel Ackerman for Marketplace. There are many ways to measure how the economy is doing, and no one number fully tells the complex story of all the people and businesses navigating it. But if there was one, it would probably be gross domestic product, GDP, the economic output of goods and services produced in the US. It's the headline number for the US Bureau of Economic Analysis. It's a number we headline on this show. It's a number

economists and policymakers use to talk and think about how the country is doing. But it wasn't always the number. Until 1991, the primary form of economic measurement was gross national product, or GNP. So why'd the government switch? Marketplace's Stephanie Hughes talks us through it. It can be hard to keep gross domestic product and gross national product straight. It's confusing, right? National refers to the people and domestic refers to the area. Brad DeLong is a professor of economics at UC Berkeley. Gross national product looks at economic production by U.S. residents no matter where they are,

emphasis on the who. Gross domestic product looks at production that happens in the U.S.'s borders no matter who they are, emphasis on the who. Gross domestic product looks at production that happens in the US's borders, no matter who does it, emphasis on the where. So I have a couple of examples. David Washausen is with the Bureau of Economic Analysis, which calculates both measures. Suppose a US auto company establishes an assembly plant in Mexico. The production of cars in Mexico would count towards US GNP because it's using labor and

capital supplied by US residents. Meanwhile, US GDP would not be impacted at all by this activity because the production occurs outside of the United States. But if a Japanese carmaker set up a factory in Ohio, that would count towards US GDP because the economic activity took place here. Brad DeLong at Berkeley says both these measures help answer the question, how rich are we? The U.S. was really trying to figure this out in the early 1940s because policymakers

wanted to know how much the private and public sector was producing. To fight a powerful enemy in the Nazis without sending the domestic economy back into recession and even depression. Steven Massacura wrote the book The Mismeasure of Progress. He says the U.S. likely adopted GNP as its official measure at this time because there was a lot less international investment then. But as the U.S. economy became more global, there was a greater push to focus on how much was being produced within its borders.

The debates about replacing GNP with GDP really take off in the middle parts of the 1980s. The Bureau of Economic Analysis switched to GDP in 1991, in part because it made it easier to compare the U.S.'s economy with others. Many countries had already adopted GDP as their featured measure by this time. Economist David Wasshausen had just started at the BEA when the change happened. He says the agency also wanted its main growth measure to be in line with the other geographic indicators that policymakers use.

They are often looking at the economic conditions here within the United States, and so it's important to have measures that are tracking the economic conditions here within the United States. But Gross National Product can answer other questions, says University of Cambridge professor Diane Coyle. If you're thinking about living standards, actually in a way, GNP is more interesting because it tells you what income is going to be available to people to maintain their standard of living.

It doesn't really matter if some of those come from overseas. Coyle wrote a book called GDP, a brief but affectionate history, and points out that in the US, GNP and GDP track pretty closely together. But there are countries, like Ireland, where GDP is much higher. Because it has a lot of overseas companies that are based there and send profits back to the United States. Coyle says it's worth noting that both GDP and GNP leave things out, including unpaid work in the home and harm to the environment. And she says looking at other measurements that take these factors into account gives

us a fuller picture of how wealthy we really are. I'm Stephanie Hughes from Marketplace. This final note on the way out today, with more people eating takeout these days, more attention has been put on its environmental toll, and more fast food and fast casual chains have been trying to come up with solutions, like offering more plant-based foods and not offering plastic straws. Here's the latest version of that, saw this on CNN. Next week, McDonald's will stop putting its McFlurry into a cup with a plastic domed lid. Instead, the soft-serve treat will be served in a cardboard cup with cardboard flaps. My question is, does the change really matter if the McFlurry machines

are perpetually broken? Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostead, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torrado, and Becca Weinman. Jeff Peters is the manager of media production, and I'm Kristin Schwab. We'll be back here tomorrow. This is APM. Understanding personal finance can feel like an impossible task, but it doesn't have to be that way. I'm Janelia Esquinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account.

Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.