By: Bill Wednieski
If you keep up on the current job market and economic news, you’d be aware of the dizzying swirl of opinions and trends, plus industry winners and losers. On the one hand, big tech companies like Microsoft, Google, Twitter, Amazon, Salesforce, and plenty of others just laid off a few hundred thousand employees. On the other hand, there are still more than 10 million job openings up against 6 million unemployed. Then, throw in terms like a soft landing, stagflation, richcession, quiet quitting, quiet hiring, The Great Resignation, hiring freezes, etc. to go along with Ukraine and China. The fact is the unemployment rate sits at 3.4% nationally today, which is the lowest it’s been in my lifetime. In Michigan, where I reside, the unemployment rate is 4.3%, which is still absurdly low.
Our firm is the busiest it has ever been. The Headhunters performs some tech industry searches, but the bulk of our business is in manufacturing, industrial, and construction with some professional services and healthcare as well. The reality is there are nowhere near the candidates to satisfy accounting, engineering, and operations leadership roles. Fairly or unfairly, the music has stopped as an excuse for blaming the supply chain and high employee turnover or absenteeism, and the patience of the decision-makers at the top has refocused on results over excuses. Confidential replacements are rising and we are working on multiple searches, including our first-ever client offering a 20% premium over our standard fee if we can identify an executive within 28 days of fee agreement execution. Fact: great candidates willing to jump ship are still scarce.
The Federal Reserve Chairman, Jay Powell has one of the toughest jobs in existence as no action he takes goes without intensive criticism. The wealthy are now concerned about a ‘richcession’, a term recently invented by Wall Street Journal reporter Justin Lahart. FYI – this describes a special class of recession that disproportionately impacts the wealthy. Rolling recession is a stronger term to use than I’d like, but it is what I believe. While the financially at-risk or lower-income portion of the population is concerned about rising credit card interest rates. As the unemployment rate rises, the candidate’s leverage dwindles as the market becomes less scarce – in theory anyway.
The mortgage industry was hit hardest first around Q2 2022 with interest rates rising from Federal Reserve decisions. The tech industry was hit next in Q4 2022 and Q1 2023. In our narrow slice of the market, today’s manufacturing sector is robustly booming, especially automotive, heavy equipment, and oil and gas. EV and battery production facilities are years out in construction so those contractors have deep backlogs. And guess what? The internal combustion engine is nowhere near dead. Fact: 95% of new US vehicles sold are still gas-powered. Stimulus funds and infrastructure projects remain out there as far as my eye can see. I’m not calling a soft landing just yet, but I hear from very busy clients who can’t seem to find quality employees every day.
We see continued uncertainty…
I’ve become quite cynical about predictions. I don’t care whether it’s a bunch of famous financial advisors doing their job market outlooks or economists forecasting the next twelve months. It’s fact that the economy will be choppy due to rising interest rates, and the persistent uncertainty of a soft landing that avoids a recession. Frequently in the same daily news, we read both about hiring freezes or layoffs and new facilities being built.
We also see return-to-office policies and less flexibility on remote or WFH, but that is a topic for another day. As the economy goes so does the candidate’s confidence in their ability to command a higher wage, change jobs, quietly quit, or take a break for any variety of reasons. With layoffs and hiring freezes trending, the more likely it is to change employer mindsets on their perceived leverage over candidates.
So, what does all this mean for the job market?
I expect employers to become even more selective with candidate hires. There are strategic and forward-thinking firms that will wisely and selectively grab newly available top talent. The return and frequency of the high-quality passive candidate are likely. Today also serves as a warning to any unhappy or even curious employees to switch employers now than be stuck for the unforeseeable future. For employers, retention is still as critical as ever. With that, I’m still seeing mediocrity being rewarded and some employees receiving promotions and generous bonuses they wouldn’t have a few years ago. Employers looking for talent will also be wise to provide flexibility in remote vs. in-office in addition to flex-time. Employees have too many options with employers that are willing to be flexible vs. the archaic Monday through Friday 8 am to 5 pm roles.