Study: NYC employers have the fewest problems hiring in the US

With a labor force participation rate of 62.4%, one of the lowest in decades, WalletHub today released its report on the 2023 states where employers are most struggling with hiring, along with expert commentary.

To see where employers struggle hiring the most, WalletHub compared the 50 states and the District of Columbia based on the number of vacancies in both the last month and the last 12 months.

New York recruiting statistics

• Last month vacancy rate: 4.60%
• Vacancy rate in the last 12 months: 5.38%
• Overall ranking: Least hiring struggle in the country

Expert comment

Why do employers have difficulty filling vacancies?

“One of the reasons is that workers have not fully returned to the labor market. For example, the latest data for January puts the labor force participation rate at 62.4 percent. This number is slowly improving, but it is still below the pre-pandemic level of 63.3 percent, not to mention the 66.4 percent before the Great Recession.”
Raymond J. Keating – Chief Economist of the Council for Small Business and Entrepreneurship

“Currently, there is a labor shortage. This deficit is the result of two important trends: 1. The labor force participation rate among working-age Americans is low, rising from 66.3% in 2002 to 62.4% today. It is not clear why it is low. Perhaps Americans overestimate their willingness to work. Possibly due to Covid fears. Perhaps to take better care of their children. They may be suffering from opioid addiction. They may be able to live on benefits received during the pandemic and do not have to pay rent for now (if the rent moratorium continues). But it is not entirely clear why the labor force participation rate is still so low. 2. The population is aging, and older Americans are retiring faster. This has definitely accelerated due to Covid fears among the elderly.”
Joel Saad-Lessler, Ph.D. – Associate Dean of Undergraduate Studies, Stevens Institute of Technology

What are the main factors influencing high employee turnover in the labor market?

“My research shows that job switching has also increased since the pandemic, and this is especially true for low-skilled young workers. We find that among those who jump out of work, their wages increase in new jobs and their working hours increase. This suggests that workers are hoping to get better results. So this is good news for them. Bad news for employers who have to compete for more for workers.”
Joel Saad-Lessler, Ph.D. – Associate Dean of Undergraduate Studies, Stevens Institute of Technology

“The relatively low unemployment rate gives workers confidence that they can find another job if they quit.”
Daniel Schwab – Associate Professor, College of the Holy Cross

What will be the economic effect, if any, of this trend?

“We see the impact in terms of higher wages and higher core inflation. Wage growth will attract more potential workers to the labor market. Firms are encouraged to expand the pool of candidates they will consider for a position, reconfigure a position, or simply not fill a vacancy. When successfully hiring new employees, firms often pay higher wages, which encourages them to either pass the cost on to customers through higher prices, or to accommodate lower product or service costs (such as compensation). If wages continue to rise, we may see some potential workers enter the labor market earlier than expected. This is especially true for young workers, who may forgo additional education to join the labor market.”
Mark Kurt, Ph.D. – Assistant Dean for Global Education; Elon University Professor

“As a result, employers will continue to raise wages and offer better working conditions in order to have more opportunities to attract and retain their workers. This will keep up inflationary pressures and will likely lead to more flexible working arrangements.”
Joel Saad-Lessler, Ph.D. – Associate Dean of Undergraduate Studies, Stevens Institute of Technology