2020 and 2021 were rough years for many people. So what does 2022 hold? While there are many factors that can affect your life in the new year, the job market is one detail that can make or break 2022. Find out what you should expect from the labor market going forward.
Understanding the Past Before Looking at the Future
Before taking a close look at what to expect for 2022, you should see a glimpse of the past. In 2020, the economy took a huge hit. What started out as a promising year turned into a pandemic with harsh economic consequences.
Trade and travel closed down as did schools, restaurants, and factories. As a result of the pandemic, there were around 20 million layoffs and 200,000 closed businesses. Lengthy hiring freezes kept people from finding new work.
Although the shutdowns only affected businesses for about two months, there were long-term consequences. Because of the risks associated with shopping and attending events, the economy only recovered by about 70%. At the end of the year, job growth was negative.
What Happened in 2021?
There was more hope for 2021. As the vaccine rolled out, more people ventured into stores and traveled. The government issued stimulus checks that increased retail spending and start-up business formation.
The newfound spending levels resulted in a need for labor. However, people weren't flocking to work. In fact, many individuals chose to stay home. School closures, quarantines, and uncertainty made the unemployed wary of returning to work.
To entice people to work, employers started increasing salaries, benefits, and sign-on bonuses. Entry-level positions saw the greatest salary hikes.
What Does 2022 Hold?
Will 2022 be a more balanced year for the labor market? It's hard to say. As the new variant of Covid takes over, people are concerned about another economic freeze. The stop of stimulus checks and other pandemic benefits could slow the economy and result in fewer jobs.
With that said, there's a chance the government will find a balance. They may be able to control inflation while keeping job growth. Slowly, workers could return to work, and the unemployment rate could remain low. For this to happen, the public needs to address Covid but not panic.
Depending on what happens, there's a chance that the pandemic will continue to keep people from returning to work. Childcare and concerns over becoming sick may still hold back job seekers.
Here are a few things you can expect for the coming year:
Return to the Workforce
There are several factors that will sway the labor market in 2022. For instance, a lack of financial cushion could force people back into the workplace. After the stimulus checks, some families were able to survive without having a steady income. If there are no more stimulus checks, we could see an increase in job seekers.
Hiring
According to economists, payroll growth should be solid this year. You just might not see the same large increases in growth every month. If there are fewer unemployed people, the growth will slow down. Just consider the numbers. In the beginning of 2021, there were 10 million less jobs than there were before the pandemic. Today, there are less than 4 million jobs to replace.
When it comes to job growth, you should still expect some gains. The leisure and hospitality industries haven't fully recovered. As those industries return to normal, more jobs will open up. Of course, this can only happen if the pandemic ebbs. More shutdowns could stop hiring.
Unemployment Rate
Because job openings should still be high, the unemployment rate should remain low in 2022. The demand for labor is unlikely to subside, so people actively looking for jobs can take their pick.
Currently, experts believe the unemployment rate will be under 3.6% by the fourth quarter of 2022. That number rivals the extremely low pre-pandemic rate of 3.5%.
This trend isn't happening across the board. Although the unemployment rate for white Americans is low, the unemployment rate for Black Americans is almost double. No one knows whether or not this gap will decrease as the year progresses.
Wages
A high demand for employees and a low supply of employees made 2021 wage increases higher than ever. And, while the wage growth might slow in 2022, it's likely to remain a trend. Employers have the power when it comes to driving salary hikes.
One reason for this is inflation. Over the past year, inflation has reached record levels. Inflation is higher than it has been since the 80s. If employers want to keep employees, they need to match inflation.
How Will 2022 Be for You?
Now that you know what to expect in 2022, what will you do? This is the year you can use to solidify your career. If you're not happy in your current job, consider a career change. It's never too late to find the job of your dreams. You can spend a few weeks researching career options and pick a path that's right for you.
If you like your job, you may want to consider an upward move. With so many jobs available, you can look for a more advanced position. Talk to your employer about a promotion or look for a new job in a more advanced position. Due to the high job availability, you might find it easy to get a job offer.
Even a lateral move has merit. Have you experienced any of the wage hikes of 2021? If not, you may deserve a raise. After you talk to your employer about a raise, give them time. But, if they don't agree to a raise, you should consider finding a new employer.
After everything is said and done, 2022 is shaping up to be a great year for job seekers. Are you ready for what the year has to offer? Now is the perfect time to work on your resume and to begin applying for a new job.