The well chronicled difficulty that employers have experienced attracting willing workers would lead you to believe the economy remains an employees’ market, allowing them to pit one job offer against another.
But the ground beneath that economic assumption is beginning to shift.
Due to the confluence of some seismic market forces, that dynamic’s beginning to change, even in Massachusetts.
Raging inflation and the steps taken to temper it have sent a chill through that hot jobs market, as some seeking meaningful employment opportunities have discovered.
As an owner of a career-coaching firm told the Boston Globe, “There still seems to be a fair amount of opportunity, but it depends on what sector you’re going into. It’s like a giant game of musical chairs. The game is still going but the chairs are getting removed, one at a time.”
One of those dominoes to fall? This state’s top-heavy tech sector, a descent hastened by a tanking stock market.
Wall Street recorded its worst performance in the first half of this year since 1970, with the Standard & Poor’s 500 Index losing 21%.
Many local tech-based companies incurred even worse damage.
While the reasons for a company’s poor performance may vary, rising interest rates stand out as a recurring theme. The Federal Reserve’s attempt to cool inflation eats into corporate profits and makes borrowing money more expensive.
Until inflation deflates, higher rates will continue to constrict economic growth, which has many economists and employers predicting an even more dire scenario – a recession.
So, it shouldn’t be surprising that soaring inflation and the prospects of a recession have created the kind of uncertainty that businesses dread.
That’s reflected in an Associated Industries of Massachusetts (AIM) report, which indicated that its business confidence index in June fell to its lowest level since December 2020, due to the rising costs and availability of goods, and concerns the economy is on the brink of the ‘R’ word — or already in one.
The index fell 3.9 points to 50.8, just above the median between an overall optimistic or pessimistic view. Three of the index’s seven key indicators have already fallen below 50 points.
Nationwide, the US Business Confidence Index sustained its largest monthly drop, falling 9.1 points in June and more than 20.3 points in the past 12 months.
Following the AIM report’s trend, the Massachusetts Index, which represents an assessment of business conditions in the state, shed 6.6 points to 47.2, and is down 16.4 over the year.
Looking ahead to projections for the economy in six months, the AIM’s monthly member survey logged a reading of 48.1.
But you wouldn’t suspect this creeping pessimism by looking at the state’s May jobless rate. But that under 4% number doesn’t paint a complete economic picture, because finding skilled workers to fill open positions remains a constant struggle.
However, a looming recession overshadows employers’ labor concerns.
AIM officials noted 76% of CEOs globally tell The Conference Board — a global, independent business membership and research association — they expect a recession by the end of 2023 …”
Economic uncertainty has trickled down to Main Street as well.
AIM President John Regan cited polling that showed Massachusetts residents “remain most concerned about the economy and jobs, inflation, housing costs and taxes.”
“The citizens of Massachusetts clearly understand that economic growth and jobs form the basis of their ability to establish a stable life and raise a family,” Regan told the State House News Service.
“The emphasis on jobs is especially notable at a time of an acute labor shortage that has allowed workers participating in the ‘Great Resignation’ to pretty much have their pick of new positions.”
All of which means the economy’s mixed signals should have all us preparing for a potentially rocky road ahead.