The Economy's Effect on the Labor Market

While delivering a presentation recently to a group of employers at the Androscoggin County Chamber of Commerce in Maine recently, it struck me how quickly the perception of labor market conditions have changed. Just two years ago, reports were regularly being cited that showed that by 2010 there would be a significant labor shortage in the US. In fact, according to one report, that shortage was to reach 10 million or more. That's 1o million more jobs than people to fill them.

Now look where we are. I was told by a manager from the RI Dept of Labor and Training that a recent small job fair they hosted at their NetworkRI office attracted more than 600 seekers! According to another source, posted in a report on the SHRM website, the total number of online job postings actually declined in the 1st quarter year over year. This is the FIRST TIME EVER that online postings have declined year over year since they began tracking it.

So, with such an abrupt change of direction, it seems hard to find the reality amidst the propaganda. Were things as good as we thought 2 years ago? Are they as bad as we think now? Or were the labor conditions of both times dramatized for effect? Regardless of those questions, where are we now? I've seen the market shrinking in some sectors, but still growing in others. While I like the idea that a friend suggest to me recently, that if everyone decides not to participate in a recession, it can't happen. So the best way to deal with an economic slowdown is simply not to participate. And this from someone with a Masters Degree in Economics.

So, does anyone have an answer to this question, or a good perspective to share? Is recruiting harder or easier right now. Are companies finding better candidates, or just more? Are passive job seekers less likely to leave the safety of their current situation, or are they feeling insecure and looking for a safety raft?

I won't pretend to be the authority on this matter, or have any specialized or insider information that I'm sitting on. I'm a manager of field operations with an online labor market service. I am lucky enough to see the job markets first hand in New England, and get reports daily from the field in the Gulf Coast. Here's what I'm seeing:

1. Most employers are not directly affected by the market, but expect to be soon. This is driving a slowdown in hiring because of the fear of the unknown. That is, "Business is still pretty good, but I'm not sure what it will be like in a few months, so I'm going to hold off on making and hiring decisions right now."
2. Some employers, particularly those in Non-Profit sectors or who receive funding from the city, state, or federal government are feeling the impact. With reduced spending from consumers, and increasing inflation, tax revenues are down or flat in many areas, leading to cutbacks which affect these companies. Sad to see that those who need the most help are the first to feel cutbacks.
3. Unemployment rates are up virtually everywhere (aside from Arkansas)- but not by similar margins. For instance in RI the rate has increased 2 full percentage points in the last year or so, while in other states the rate is up only a couple tenths of a point.
4. Passive job seeker traffic does NOT appear to be up by any considerable margin. I think this means people are clinging to the safety of their current jobs, rather than jump to an unknown. This means companies must work harder to reduce the risk to potential candidates, and provide greater information about themselves.
5. Retailers are still hiring as necessary, keeping the same level of staffing, and still getting the same level and quantity of candidates as they were 2 years ago.
   
6. Manufacturing is alive and well in the gulf coast!
   
7. Employers who are making the extra effort to promote their opportunities in this climate are seeing improved results in hiring. When people are watching the newscasts and reading the papers and all they hear are negative projections about the economy, a company that stands up and says thing like We're Growing! We're Stable! We're Not Laying Off or Downsizing! We're a GREAT Place to Work, is easily able to grab people's attention and build interest.

Overall, I feel that this should be a really tremendous time to be hiring. If you do it right, put in the extra effort to promote what makes you special, and take the time to be picky, you should be able to attract and hire some great A level talent. GOOD LUCK!