For the first time in a long time, there is cautious optimism about the U.S. economy. It is being fueled by a strong labor market. In May, 339,000 jobs were added – nearly double projections – and while that cooled to 209,000 new jobs in June, many experts are predicting a soft landing for the economy instead of a recession.
The number of open jobs sits at 9.8 million. At a time when quit rates are declining, this signifies that the labor market is strengthening, and companies are looking to expand and hire as many workers as they can. It also means job seekers have more choices and opportunities.
Recent data from the Bureau of Labor Statistics sheds light on the country’s most in-demand sectors. Notably, most of the recent hires were in professional and business services (64,000); professional, scientific and technical services (43,000); government (56,000) and health care (52,000).
Leverage Between Employers and Employees
The ongoing fight for leverage betweens employers and job seekers remains a complex and rapidly evolving issue. The labor market during and following the global pandemic was largely defined by “The Great Resignation.” A record 50 million people quit their jobs in 2022, breaking the previous record set in 2021.
With so many unfilled jobs, job seekers had historic leverage and employers had to roll out the red carpet and acquiesce to worker-friendly policies such as higher pay and the ability to work remotely.
The most recent federal data shows the Great Resignation has come to an end with national quit rates falling to 2.4% in March, just .1% higher than in February of 2020. To be clear, lower quit rates do not equate to the strengthening of the economy – in fact it is quite the opposite.
A BLS report notes, “Quit rates tend to rise during expansions, when workers’ prospects for finding a better job brighten.” The Roosevelt Institute also notes higher quit rates represent, “A necessary reshuffling of jobs leading marginalized workers to pursue better working conditions and wages.”
But what the return to pre-pandemic quit rates may signal is that employers are regaining some leverage. We are seeing many of them attempt to exercise that leverage by ending another pandemic workplace trend – working from home.
Many Fortune 500 companies such as Disney and JP Morgan are mandating that employees return to the office. Even Big Tech companies like Meta and Google – who were the ones who introduced remote work and extravagant workplace perks in the first place – are now opting for a return to work or a hybrid model.
However, employers must not get too complacent. Projections from the World Economic Forum indicate that over the next five years, approximately 17% of North American workers are expected to switch jobs. This trend is even more pronounced within the business development sector. In the current climate, a company’s ability to recruit and retain top talent is critical to success.
Purpose of the Study and How We Determined The Rankings
As a whole, things are looking up for business owners and American workers across the country. But the dynamics between employers and employees continues to be in flux as the economy attempts to recover and enter a long awaited period of prosperity.
As experts in B2B sales recruiting, Peak Sales Recruiting has conducted extensive research on the labor market at large to inform business owners, entrepreneurs and job seekers about the state of the labor market in their area.
It is critical to understand the rapidly changing landscape in the state that you reside in order to achieve success.
To determine which states have the strongest labor markets we analyzed the most recent data from BLS. We factored in positive indicators such as employment, wage growth, labor productivity, quit rates (higher rates means the labor market is expanding) and job openings (a sign that employers are looking to expand their businesses). We also factored in negative benchmarks such as layoffs and underemployment.
A Few Key Findings:
- The Southeast is home to the states with the strongest labor markets in 2023, driven by strong employment growth, job openings and quits – meaning job seekers have their pick of the litter. Louisiana is the No. 1 state, with the highest rates of labor productivity increases and quit rates than any other state, while nearby South Carolina and Florida also rank in the top five.
- Notably, economic powerhouses California and New York rank among the states with the weakest labor markets. That’s not due to a lack of opportunity, with both states reporting above-average employment growth rates. But they are also experiencing major drops in average wages, as well as high underemployment and declines in labor productivity.
- Despite ranking near the bottom, No. 45 Nevada saw greater employment growth than nearly any other state, while No. 43 Alaska had a higher job openings rate and No. 37 Washington, D.C., saw the lower rate of layoffs.
Best and Worst States
Louisiana has the country’s strongest labor market, likely bolstered by its diverse economy and range of industries, from energy to aerospace to advanced manufacturing. Using the most recent data, Louisiana’s labor productivity was up by 6.1%, while job openings increased by 7.3% and the quit rate reached 3.7% – a higher rate than any other state.
Even so, Louisiana falls in the middle of the pack for employment and wage growth and has a slightly above-average rate of layoffs and underemployment, serving as a reminder that Louisaiana’s opportunity is not felt equally by all workers, and that no state has perfect labor conditions.
States With the Best & Worst Job Markets
|
State |
Overall Ranking |
Overall Z Score |
|
Louisiana |
1 |
0.851 |
|
South Carolina |
2 |
0.748 |
|
Florida |
3 |
0.709 |
|
Virginia |
4 |
0.647 |
|
Idaho |
5 |
0.644 |
|
Georgia |
6 |
0.636 |
|
Alabama |
7 |
0.591 |
|
Kentucky |
8 |
0.569 |
|
Arkansas |
9 |
0.459 |
|
Delaware |
10 |
0.374 |
|
Texas |
11 |
0.372 |
|
Utah |
12 |
0.325 |
|
West Virginia |
13 |
0.314 |
|
Nebraska |
14 |
0.297 |
|
South Dakota |
15 |
0.284 |
|
Wyoming |
16 |
0.213 |
|
North Dakota |
17 |
0.196 |
|
New Mexico |
18 |
0.178 |
|
Oklahoma |
19 |
0.174 |
|
Minnesota |
20 |
0.171 |
|
North Carolina |
21 |
0.165 |
|
Iowa |
22 |
0.112 |
|
Vermont |
23 |
0.094 |
|
Mississippi |
24 |
0.033 |
|
Indiana |
25 |
0.022 |
|
Wisconsin |
26 |
0.010 |
|
Montana |
27 |
-0.014 |
|
Maine |
28 |
-0.029 |
|
Missouri |
29 |
-0.050 |
|
Tennessee |
30 |
-0.054 |
|
Kansas |
31 |
-0.059 |
|
Arizona |
32 |
-0.091 |
|
Colorado |
33 |
-0.103 |
|
Ohio |
34 |
-0.137 |
|
Maryland |
35 |
-0.142 |
|
Pennsylvania |
36 |
-0.199 |
|
District of Columbia |
37 |
-0.232 |
|
New Hampshire |
38 |
-0.240 |
|
Oregon |
39 |
-0.244 |
|
Hawaii |
40 |
-0.260 |
|
Connecticut |
41 |
-0.329 |
|
Alaska |
42 |
-0.460 |
|
Massachusetts |
43 |
-0.471 |
|
New Jersey |
44 |
-0.485 |
|
Nevada |
45 |
-0.504 |
|
Illinois |
46 |
-0.528 |
|
Michigan |
47 |
-0.653 |
|
Washington |
48 |
-0.660 |
|
Rhode Island |
49 |
-0.840 |
|
New York |
50 |
-1.019 |
|
California |
51 |
-1.228 |
Source: Peak Sales Recruiting analysis of Bureau of Labor Statistics data
South Carolina, Florida, Virginia and Idaho also landed among the top five. Each of these states has higher rates of job openings and employment growth, while average weekly wages have increased by 0.9% in South Carolina between December 2021 and 2022.
Despite its reputation as a hub for innovation and technological advancement, California faces significant challenges in its labor market – and it ranks last. Average weekly wages in the state have dropped by 6.9%, while 8.7% of workers are underemployed and the quit and job opening rates were lower than in most other states.
New York, Rhode Island, Washington and Michigan rounded out the bottom five due to poor scores for labor productivity, wages, underemployment and job openings. However, these states also have some bright spots: New York’s layoffs rate was 0.8% in March, lower than almost anywhere else, while Washington saw strong employment growth (3.1%).
5 Tips To Recruit And Retain Talent In 2023
Recruiting and retaining top talent is crucial for the success and growth of any organization. In 2023, with the evolving job market and changing expectations of employees, it’s important to adapt your recruitment and retention strategies. Here are five tips to help you recruit and retain talent in 2023:
-
Embrace remote work and flexibility: With the rise of remote work and hybrid models, offering flexibility in working arrangements is highly valued by employees. Consider implementing remote work policies, flexible hours, and other initiatives that promote work-life balance. This will attract candidates who prioritize flexibility and enable you to retain existing employees who value remote work options.
-
Prioritize diversity and inclusion: Inclusion and diversity are critical factors in attracting and retaining talent. Foster a culture that celebrates diversity and creates an inclusive environment for employees from different backgrounds. Establish diverse hiring practices, offer diversity training, and promote inclusive policies. A diverse workforce not only brings varied perspectives but also enhances creativity, innovation, and employee satisfaction.
-
Offer competitive compensation and benefits: To attract and retain top talent, ensure your compensation packages are competitive in the market. Stay updated on industry standards and adjust your salary ranges accordingly. Additionally, provide attractive benefits such as health insurance, retirement plans, professional development opportunities, and employee perks. Conduct regular salary reviews and ensure your benefits package remains enticing.
-
Focus on employee growth and development: Employees value organizations that invest in their growth and provide opportunities for skill development. Implement mentorship programs, offer training workshops, and support continued education. Create personalized development plans for employees and provide regular feedback to help them grow professionally. This emphasis on growth and development will not only attract high-potential candidates but also contribute to employee retention.
-
Foster a positive company culture: A positive company culture plays a significant role in attracting and retaining talent. Cultivate a work environment that promotes open communication, teamwork, and a sense of purpose. Recognize and reward employee achievements, encourage collaboration, and foster a supportive atmosphere. A strong and positive company culture will not only attract top talent but also ensure that employees are motivated and engaged in their roles.
Remember, these tips should be adapted to your specific industry, organizational culture, and the needs of your employees. Stay abreast of current trends and continuously seek feedback from your workforce to refine your recruitment and retention strategies in line with the evolving landscape.
5 Tips For Job Seekers In 2023
In recent years, employees have had more leverage and choice in where they work than they have historically. Amid the changing landscape, competition for top jobs remains fierce but there are ways to stand out from the pack. Here are five tips for job seekers in 2023.
- Embrace Remote and Hybrid Work: In response to the global pandemic, remote and hybrid work arrangements have become more prevalent. Be open to these options and showcase your ability to work effectively in a remote or flexible environment. Highlight your communication and collaboration skills in virtual settings, as well as your ability to adapt to new technologies and tools.
- Develop In-Demand Skills: Stay updated on the latest trends and technologies in your field and invest time in developing in-demand skills. Consider taking online courses, attending webinars, reading books, or participating in workshops to enhance your expertise. This proactive approach will make you more attractive to potential employers who are seeking candidates with relevant and up-to-date skill sets.
- Network Strategically: Networking remains a crucial aspect of job searching. Leverage both online and offline platforms to connect with professionals in your industry. Engage with relevant communities, join industry-specific groups on social media, and attend virtual conferences or meetups. Establishing meaningful connections can lead to valuable job opportunities or referrals.
- Customize Your Application Materials: Avoid sending out generic resumes and cover letters. Tailor your application materials to each specific job you apply for. Research the company and the position, and highlight the skills and experiences that align with their requirements. This personalized approach demonstrates your genuine interest and attention to detail, increasing your chances of standing out among other candidates.
- Leverage Online Job Search Tools: Take advantage of the numerous online platforms and job search tools available. Explore professional networking sites like LinkedIn and job search websites to find relevant openings. Set up job alerts and create a comprehensive profile that showcases your skills and experiences. Additionally, consider using AI-powered job search platforms that match your profile with suitable job opportunities.
Remember, persistence and a positive attitude are key throughout the job search process. Keep refining your skills, adapting to the changing job market, and seeking opportunities to grow both personally and professionally. Good luck!
Conclusion
While the economy remains steady the state of the labor market varies greatly depending on the state and region in which you reside. Pandemic trends such as the Great Resignation are in the rearview mirror, and while things are looking up for both employers and employees, the state of the labor market remains a complex issue. It is critical that job seekers and business owners understand the rapidly changing landscape in order to achieve success.
Methodology
We used the most recent data from the U.S. Bureau of Labor Statistics for seven metrics to determine the states with the strongest job markets. We used a Z-score distribution to scale each metric relative to the mean across all 50 states and Washington, D.C., and capped outliers at 3. We multiplied some Z-scores by -1, given a higher score was negatively associated with being above the national average, including layoffs and underemployment. A state’s overall ranking was calculated using its average Z-score across the seven metrics. Here’s a closer look at the metrics we used:
- Employment growth rate (May 2022-2023)
- Job openings rate, (March 2023)
- Layoffs rate (March 2023)
- Quits rate (March 2023) (Higher quit rates were measured as a positive sign of a strong labor market with employees confident in their ability to find other jobs)
- Average wage growth (December 2021-2022)
- Underemployment rate (Q2 2022-Q1 2023)
- Labor productivity growth rate (2022)
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