More than a year of steady Fed rate hikes. A banking crisis leading to worries about a credit crunch. Experts who keep warning of impending recession.
Challenges and uncertainties are the norm these days.
Nonetheless, it seems nothing can keep the U.S. labor market down. In fact, the official May report showed the economy continuing to add jobs, with payrolls in the public and private sector increasing by 339,000. The unemployment rate rose but is still near the lowest since 1969, and many organizations say they still can’t fill open positions.
For now, hiring needs are mostly outweighing economic considerations, with 90% of hiring managers saying they have difficulty landing new talent.
When will the picture change? Unfortunately, it may not.
Why Companies Will Continue to Struggle with Talent Recruitment
Why are labor market pressures bucking otherwise troubling economic trends? Many experts point to demographics and generational differences, including:
- The number of working age people in the U.S. will decline by 3 percent over the next decade, according to World Bank data.
- Baby Boomers, who were for a long time the biggest generation in the workforce, are now retiring, and a less populous Gen X isn’t sufficient to fill the gaps at that level of seniority.
- There are lots of Millennials but those born between 1981 and the mid-1990s exhibit shorter tenures in work positions, meaning more job churn and more overall recruiting.
- Finally, Gen Z, the youngest element of the workforce, is so far bringing a more transactional attitude to employment, the full effects of which are yet to be seen.
It’s a simple case of supply and demand. Fewer workers and greater turnover means that hiring will be an increasing challenge. That’s not to say that macroeconomic conditions will never have an effect, but they may only temporarily blunt the impacts of long-term tightening across the job market.
Recruitment Planning is Essential
What does this state of affairs mean for employers? Jobseekers will hold substantial power for the foreseeable future. Although companies may enjoy short reprieves from intense talent competition, the overall trend will be toward scarcity.
As a result, organizations will need to plan effectively, such as by:
- Forecasting labor needs The further out HR leaders can see, the better they can prepare. Organizations should devote resources to predicting talent requirements and continually improving the accuracy of these forecasts. New products, initiatives, or problems to be overcome should be accompanied by a list of positions that must be filled to achieve the company’s goals.
- Balancing budgets and talent: It may be advantageous to hire talent before you need it. Should the right candidate appear before a job opens, consider offering a position anyway, if budget allows. That way, you won’t risk a long and potentially fruitless search down the road. By the same token, carefully evaluate downsizing plans, as overcorrection for brief economic headwinds could save in the short run but ultimately leave you at a disadvantage when things turn around.
- Target innovation: In a competitive labor market, employers will need to do everything in their power to attract and onboard talent more effectively than other organizations. From creative approaches to candidate engagement to cutting-edge tools for enhancing the hiring process, innovation is more important than ever. So don’t get stuck in the rut of doing things as they’ve always been done—take a fresh look at all aspects of the hiring process, then schedule time to return to the topic at regular intervals.
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