David Robinson
It’s starting to look like the labor shortage that kept a lid on hiring across the Buffalo Niagara region for much of the last two years is finally easing.We see evidence of that in the pace of local hiring, which has been steadily increasing over the past year, averaging a little less than 1,000 new jobs each month – a pattern that continued into March, according to new data from the state Labor Department.That’s a positive sign for several reasons:• It shows sustained gains• It shows that the region is finally inching closer to recovering all of the jobs it lost during the Covid pandemic, which hit the Buffalo Niagara job market harder than most places.And it shows that employers are able to find workers that they want to hire.
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The number of Americans filing for jobless benefits didn’t change last week as the labor market continues to defy efforts by the Federal Reserve to cool it off. The Labor Department reported Thursday that unemployment claims for the week ending April 13 were unchanged from the previous week’s 212,000. Weekly unemployment claims are considered a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. In total, 1.81 million Americans were collecting jobless benefits during the week that ended April 6, an increase of 2,000 from the previous week.
And then there’s the other sign that the labor shortage has eased: The region’s steadily rising unemployment rate, which now is among the nation’s highest for metro areas with at least 1 million people.Normally, a rising unemployment rate would be a bad sign – and in some ways, it is. The number of local workers who are actively looking for a job but can’t find one has been steadily increasing.But there also is a silver lining in the region’s rising unemployment rate. It’s been rising, in part, because workers who had stopped looking for a job when the pandemic hit have been returning to the job market. Our labor force now is down only about 3,700 people from what it was before the pandemic.”We’re seeing more of a normal labor force now,” said Timothy Glass, the Labor Department’s regional economist in Buffalo. “It’s more of a balanced job market now, where maybe the stress from the lack of workers is starting to alleviate.”That’s important because about 20,000 people dropped out of the labor force during the first year of the pandemic. Some retired early. Others didn’t want to work for the wages employers were offering. Others were held back by family considerations with schools going remote and child care challenges mounting.So as the pandemic eased and businesses wanted to bring back workers, they struggled because many of the pre-pandemic workers weren’t ready to return to the job market.That meant employers were scrambling to hire people. They had to pay higher wages to lure them. And sometimes, they had to do more training than they otherwise might have wanted to do, simply to add the people they needed.So the region’s unemployment rate, which had spiked from 4.3% before the pandemic to just under 22% a month after Covid hit with full force, steadily declined as businesses scooped up just about anyone who wanted a job.By April 2023, the unemployment rate was down to a modern-day low of 3.3%, and there were just under 18,000 people who were looking for a job but couldn’t find one. That left the pool of people who were unemployed and actively looking for a job 25% smaller than it was before Covid.In other words, the pickings were slim for businesses that wanted to hire. And those slim pickings kept a lid on the region’s job growth – and its recovery from the pandemic job cuts. It’s a big reason why the region still has 3,500 fewer jobs than before the pandemic, while the rest of the country has regained all of its lost jobs and now has almost 4% more.
But local workers continue to rejoin the labor force. Today’s higher wages are a lure for some. There’s also a good chance that a worker can find a job if they want one. And some of the family-related issues, such as child care, have eased as schools have reopened and services have pretty much gotten back to normal.So the region’s unemployment rate has steadily increased over the past year. It’s now 4.1% after adjusting for seasonal factors, still below pre-pandemic levels and still very low by Buffalo Niagara historical standards.”We’re not as tight as we used to be,” Glass said. “I also think we’re seeing an increase in the labor force participation, and that’s huge.”That extra slack in the local labor force has allowed businesses to keep hiring, even with high interest rates and rising prices squeezing both businesses and consumers. It’s persisted even as factories and service firms have turned wary about how business will be in the coming months.A survey of service industry executives in New York and the New York City area found that wage increases are moderating and are expected to keep rising at a less-than-robust pace, said Richard Deitz, an economist at the Federal Reserve Bank of New York, which conducted the survey earlier this month. Hiring also is expected to continue at a moderate pace.New York manufacturers, which have been facing tougher business conditions over the past few months, said in a similar Fed survey that those challenges are continuing, with hiring on the decline and optimism about the next six months remaining subdued.
Tesla is cutting 285 workers at its Buffalo factory, the electric vehicle maker said in a filing with state officials Wednesday. The job cuts amount to 14% of its Buffalo workforce.
“The market is definitely less tight than it was a year ago, which may indicate that demand is slowing,” said Julie Anna Golebiewski, a Canisius University economist.But that’s not necessarily all bad.”In some ways, it’s a welcome change,” Golebiewski said. “We’re seeing demand and the supply of workers match more closely. That’s going to reduce the upward pressure on wages, which is then going to slow inflation.”And there are other clouds looming. Tesla is cutting 285 local jobs. School districts throughout the area are cutting jobs because of budget shortfalls.Yet there are bright spots to offset that. Construction employment is running stronger than it was at this time last year, likely because of the Buffalo Bills stadium project. Local hospitals, hit hard by the labor shortage, have added 7% more jobs over the past year. The region’s bars, restaurants and hotels have almost 6% more jobs than a year ago.”Overall, our region is doing pretty well,” Glass said. “It’s been pretty steady.”
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