ALEXANDRIA, Va.—The Department of Labor said Friday that the U.S. economy added 223,000 nonfarm jobs during December, and the unemployment rate fell to 3.5%. Leisure and hospitality, health care, construction and social assistance benefited from job gains.
Of interest to convenience retailers, employment in retail jobs was little changed in December, up 9,000 jobs, the department’s Bureau of Labor Statistics reported. In December, employment in transportation and warehousing also was little changed, with a net gain of 5,000 jobs.
In a separate report from ADP released Thursday ahead of today’s jobs report, private payrolls added 235,000 jobs for the month of December, according to the payroll-processing firm, which was far higher than the Dow Jones estimate of 127,000 jobs.
Service industries led in jobs added, with the leisure and hospitality industry adding 123,000 positions last month. The entire service industry as a whole added 213,000 total. Professional and business services grew by 52,000, while education and health services added 42,000. Also, the construction industry added 41,000 jobs.
ADP also found that annual pay rose 7.3% year over year, with the leisure and hospitality industry seeing a 10.1% increase in pay in that same time frame.
“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” ADP’s chief economist, Nela Richardson, told CNBC. “Business segments that hired aggressively in the first half of 2022 have slowed hiring and, in some cases, cut jobs in the last month of the year.”
Some industries lost jobs in December, including trade, transportation and utilities (24,000); natural resources and mining (14,000); and financial activities (12,000). Companies with more than 500 employees saw a job loss of 151,000. However, small- and medium-sized businesses together added 386,000 positions.
In 2022, private payroll grew an average of 300,000 a month, according to ADP. The job growth comes even as the economy saw negative growth in the first two quarters, which CNBC writes is a widely accepted definition of a recession, along with interest rate hikes from the Federal Reserve.
Federal Chairman Jerome Powell recently said that price trends for services, not including housing, reflect inflationary pressures in the broader economy and were important when gauging inflation’s future path.
“Because wages make up the largest cost in delivering these services, the labor market holds the key to understanding inflation in this category,” he said in a recent speech.
The central bank raised interest rates seven times in 2022, totaling 4.25 percentage points, and the Fed has made it known that they will continue to raise rates in 2023 and don’t anticipate any reductions at least through this year.
There are still about 1.7 job openings for every available worker, according to CNBC, which has led to wage hikes, as companies are paying their workers to stay. Wages for workers who stayed in their roles were up 5.5% in November year over year, according to the Federal Reserve Bank of Atlanta, up from 3.7% in January 2022 and the highest increase in 25 years.
Job seekers in retail and leisure and hospitality can easily find jobs that offer more pay, making it enticing to switch, Layla O’Kane, senior economist at Lightcast, told the Wall Street Journal.
Those who switched jobs saw an average wage gain of 7.7% in November year over year, and the prospect that employees might leave for bigger paychecks is a main reason companies are raising wages for existing employees, according to the Journal.
Companies are also incentivizing employees to stay for their first 90 days on the job, which executives and human resource specialists say is key to long-term retention. Other companies believe innovative scheduling is the key. One Chick-fil-A in Miami has been using a three-day workweek to recruit and retain employees, and it’s working. Fast-casual restaurant chain Dig is testing a four-day workweek with its full-time staff.
NACS hosted three webinars last summer that discussed innovative ways to address the labor shortage facing the convenience retailing industry, including flexible and innovative scheduling.
NACS has partnered with The Good Jobs Institute on how c-store operators can provide “good jobs,” which meet people’s basic needs and offer conditions for engagement and motivation. The Good Jobs Calculator, designed exclusively for NACS members and the convenience industry, allows retailers to use their own data and customized assumptions about the amount of improvement or uplift achievable, enabling executives to run scenarios on the bottom-line impact of a Good Jobs system.