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The decline suggests job security is a “significant” concern, said Daniel Zhao, senior economist at Glassdoor. “It’s a signal that employees are worried about 2024,” he said.
This deterioration is likely due to a wave of layoff announcements in recent weeks, Zhao said.
So far, for example, large technology companies such as Amazon, eBay, Google and Microsoft have announced job cuts for 2024. But it's not just technology. Others such as BlackRock, Citigroup and Universal Music Group also announced layoffs.
U.S.-based companies planned about 722,000 job cuts in 2023, nearly double the number announced in 2022, according to Challenger, Gray & Christmas, an outplacement and executive coaching firm.
However, these recent headlines mask the strength of the overall labor market, economists say.
From a workers' perspective, “things are not getting better,” said Mark Zandi, chief economist at Moody's Analytics.
Despite numerous layoffs in certain industries such as technology, job cuts in the broader U.S. labor market remain near historic lows, where they have been since spring 2021, according to Zandi.
New unemployment insurance claims are in line with their pre-pandemic trend in 2019, which economists describe as a period of labor market strength. The unemployment rate has also been below 4% for two years.
When it comes to the average annual unemployment rate, 2023 was actually the sixth-best year on record, only a few years behind the 1950s and 1960s, said Julia Pollak, chief economist at ZipRecruiter.
“It’s still a very robust and resilient labor market overall,” Pollak said.
While the Glassdoor index shows deteriorating confidence, other metrics signal a more optimistic view of the labor market and the U.S. economy.
For example, according to the University of Michigan, consumer sentiment rose 13% in January to its highest level since July 2021. Similarly, a Conference Board survey found that consumer optimism increased in December across all age groups and household incomes.
Real estate values and stock prices are at record highs and, relatively speaking, “everyone has a job,” Zandi said.
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ZipRecruiter's Job Seeker Confidence Index has also increased in the last two quarters of 2023, but is still below where it was at the start of 2022.
The overall mood of workers likely depends on their reference point, Pollak said.
For example, when workers compare the results with what was expected in 2023 – a year in which many economists had expected the U.S. to slip into recession – then the current job market seems like “a miracle,” he said Pollak.
But workers are more likely to compare their current prospects with those of a year or two ago, a time when the job market was red-hot and workers had record resources to get better jobs and higher wages. Since then, “things have definitely cooled down and slowed down,” Pollak said.
The Federal Reserve aggressively increased borrowing costs to cool the economy and labor market and ultimately curb persistently high inflation.
The inflation rate has fallen significantly since its peak during the pandemic. But the inflationary episode has caused consumer costs to become significantly more expensive, particularly for staples such as food and rent, economists say.
“The only [economic] “The flaw – and it is a big flaw – is that prices are much higher than they were two to three years ago,” Zandi said.
High inflation during the pandemic weakened the purchasing power of the average citizen in consecutive months over more than two years. While wage growth was historically high, workers bought less with their wages.
However, that trend has reversed: Wage growth now exceeds the average citizen's inflation rate, meaning workers' salaries are rising again relative to the things they buy. If this trend continues, consumer confidence should gradually recover, Zandi said.
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