Employment Update

January 2025

The American employment landscape is constantly changing. Keep up-to-date with the most recent trends with our monthly Employment Update. All figures are provided by the Bureau of Labor Statistics and the America Staffing Association.

Explore the latest trends in the American employment landscape with Acara

Acara’s Shannon Callahan and Stephanie Amos provide a brief video overview of the latest trends in the employment landscape and what they signify for the future of employment in the U.S.

  • Acara Icon Workforce

    Unemployment slightly decreased​ - 4.0%

    The unemployment rate edged down to 4.0 percent in January, after accounting for the annual​ adjustments to the population controls.

  • Acara Icon briefcase

    Long-term unemployed changed little

    The number of long-term unemployed (those jobless for 27 weeks or more), at 1.4 million,​ changed little in January.

  • Acara Icon Workforce

    Labor force participation changed little

    The labor force participation rate, at 62.6 percent, changed little over the month and has remained in a after accounting for the annual adjustments to the population controls.

  • Acara Icon earnings

    Average hourly earnings rose by $0.17

    In January, average hourly earnings for all employees on private nonfarm payrolls rose by 17 cents, or 0.5 percent, to $35.87.

  • Acara Icon Rejected

    Number of people working part time for economic reasons changed very little

    The number of people employed part time for economic reasons, at 4.5 million, changed little in January.

  • Icon showing outlines of a home, dollar sign, and a plant

    People not in the labor force who currently want a job changed little

    The number of people not in the labor force who currently want a job, at 5.5 million, was​ little changed in January.

  • Acara Icon temp

    Temp penetration rate at 1.59%

    Temporary help employment was 1.59% of total nonfarm employment in January.

  • Acara Icon people circles

    Temp help jobs decreased​

    Temporary help jobs in January decreased -6.1%, seasonally adjusted, from the same month last year.

  • Acara Icon payroll

    Nonfarm payroll ​employment rose​

    Total nonfarm payroll employment rose by 143,000 in January.

    Notable job gains occurred in ​

    Health care (+44K)​
    Government (+32K)​
    Retail trade (+34k)

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Industry Trends – Return to Office (RTO) Mandate​

Acara summarizes the latest industry trends each month to keep you informed as you make decisions about the future of your business.

  • Recent RTO Updates

    Recent return-to-office (RTO) mandates have sparked controversy and debate across various sectors. The new administration recently issued an executive order requiring federal employees to return to their workplaces full-time “as soon as practicable.” This move has been met with dismay from many government workers who have grown accustomed to remote work arrangements

    75% of workers required in office, up from 63% in 2023.*

  • RTO Preparation Strategies

    The return-to-office (RTO) mandate is significantly impacting employees’ mental health, with 58% reporting a negative effect on their well-being. This transition is causing increased stress and anxiety for many workers, stemming from factors such as loss of flexibility, commuting hassles, and social pressures. 

  • To overcome these challenges, HR managers can take several steps:

    Communication and Transparency

    • Provide clear, frequent updates about RTO plans and policies
    • Explain the reasoning behind the RTO decision
    • Address employee concerns and questions proactively

    Flexibility and Support

    • Consider implementing a hybrid work model where possible
    • Offer flexible scheduling options to ease the transition
    • Provide resources for childcare and commuting challenges

    Mental Health Support

    • Expand mental health resources and benefits
    • Provide access to counseling services or Employee Assistance Programs (EAPs)
    • Offer workshops on stress management and work-life balance

Industry Trends – Increase in Skills-Based Hiring​

  • What is Skills-Based Hiring?

    Skills-based hiring represents a paradigm shift in talent acquisition, focusing on an individual’s actual capabilities rather than their academic background. This approach recognizes that practical skills, demonstrated competencies, and potential are often more predictive of job performance than traditional markers of professional readiness.

  • Skills-based hiring is gaining unprecedented momentum in the US job market.

    • 73% of employers used skills-based hiring in 2023, up from 56% in 2022
    • A skills-based hire is 5 times more likely to predict job performance than an education-based hire
    • Companies report 89% reduction in mis-hires when implementing skills-first recruitment strategies
  • Driving Factors

    • Tight labor market and talent shortages
    • Post-COVID reset of the job market
    • Decline in college enrollments
    • Need for increased diversity and inclusion
  • Skills-Based Hiring Offers Multifaceted Advantages​

    • Dramatically expands potential talent pools
    • Reduces hiring bias
    • Lowers recruitment and training costs
    • Accelerates time-to-productivity
    • Increases workforce diversity and innovation potential
  • Future Outlook

    As the job market continues to evolve, skills-based hiring is not just a trend but a fundamental reimagining of talent acquisition. Organizations that embrace this approach are positioning themselves to attract, retain, and develop the most adaptable and capable workforce.

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