It’s been a summer time filled with contradictions for the US economic system. 

As restoration from the pandemic continues, we’ve skilled a tumultuous interval of labor shortages, inflation, and now fears of an impending financial downturn. Nonetheless, whereas some industries are going through very laborious instances and troublesome decisions, others are nonetheless booming. 

“We’re simply on this bizarre economic system that generally looks like a recession, however is rising on the similar time,” says Robert Daugherty, senior vp of worldwide expertise acquisition at ZoomInfo.

Even the savviest recruiters and expertise acquisition (TA) managers might discover themselves struggling to navigate this “everything-is-weird economic system.” Right here’s what you must know. 

An Economic system in Limbo 

The August 2022 jobs report follows a surprisingly sturdy July 2022 jobs report, giving companies a motive to stay cautiously optimistic. 

Employment 

In July, greater than double the anticipated quantity of jobs — 528,000 —  had been added to the economic system, bringing employment again to pre-pandemic ranges. Nonetheless, August solely noticed an extra 315,000 jobs. 

Unemployment rose from 3.5% in July to three.7% in August, however that coincides with a rise within the variety of folks actively searching for jobs, relatively than main job reductions.

New Hires

Hiring noticed little change in July with 6.4 million positions crammed throughout all industries. 

Wages 

Pay charges have elevated general, as common hourly earnings elevated by 0.5% from June to July, greater than economists anticipated. As wages rise, client costs can observe — each components in inflation. 

Nonetheless, in August, common hourly wages rose 0.3% from July, up 5.2% from final 12 months. This means that the extended disparity between labor demand and provide would possibly lastly be realigning. 

Whereas these are encouraging indicators that point out a powerful labor market, different developments point out financial weak point — making it laborious to agree on a cohesive narrative about the place the economic system is headed. 

“Many individuals see excellent news as dangerous information as of late,” says Julia Pollak, chief economist at ZipRecruiter, “as a result of such sturdy job numbers suggest that individuals are going to be spending loads, and that inflation might be extra persistent.”

Labor Drive Participation

The labor power participation charge remained nearly unchanged this summer time, transferring from 62.2% in June to 62.1% in July, after which growing to 62.4% in August. 

That leaves the labor power one share level beneath its February 2020 degree, exhibiting some lingering results of the pandemic. 

Job Openings 

The variety of job openings dropped from 11.3 million in Might to 11 million in June and landed up at 11.2 million on the final day of July. Nonetheless, that is considerably greater than the 6.9 million job openings of February 2020, exhibiting a still-robust demand for expertise. 

Quits 

A reported 4.2 million folks stop their jobs between June and July, marking the thirteenth month that over 4 million folks handed of their resignation. 

“Corporations are hiring way more folks every month than they had been, and nonetheless seeing extra quits than earlier than the pandemic,” Pollak famous. “In consequence, many are coping with enormous recruiting and retention difficulties whereas going through far more churn than regular — and they’re struggling.” 

Recession Worries 

The interval between mid-June to mid-July was powerful for companies as rising inflation, rates of interest, fuel costs, and a teetering inventory market sparked concern about the potential for an oncoming recession. 

Nonetheless, whether or not this era will really be recorded as a recession remains to be debatable. Two quarters of unfavorable GDP progress is often shorthand for a recession, however the definition utilized by the Nationwide Bureau of Financial Analysis features a for much longer record of indicators, which all seemed rosy by way of Might. 

If a recession is known as, it gained’t be for some time. A recession might have began in June or July, however many economists say it’s extra doubtless that if a recession occurs it is going to begin within the fourth quarter or early subsequent 12 months. 

“We might keep away from a recession fully. It may very well be that the beneficial properties we’ve seen within the labor market are self-perpetuating. When so many individuals acquire jobs, they acquire incomes, they spend extra and companies want to rent extra,” Pollak says. 

Contextualizing Layoffs 

Information of layoffs at main firms, resembling Netflix, JPMorgan Chase, and Tesla, prompted alarm. Many staff in these areas turned to social media to announce their layoffs and discover new jobs as a career-boosting technique, additional propelling recession fears amongst on-line skilled networks. 

The adjustments seem like concentrated within the automotive, monetary companies, and tech industries. Lots of the layoffs at US firms have both been at startups which might be struggling as enterprise capital (VC) funding will get pulled, or at giant firms which might be uncovered to inventory market fluctuations and face stress from traders to chop prices and present income.

Whereas layoffs haven’t been widespread, the job cuts which have occurred may be an echo of COVID-era scrambles for restoration. Following the preliminary section of the pandemic, there was a ramp-up in hiring, whereas on the similar time, many individuals couldn’t return to the labor market. 

“Corporations ended up hiring heat our bodies to simply do the work, generally two or three folks to execute the identical function. It may very well be that they now have to think about downsizing their workforces to attain higher effectivity,” Daugherty says. 

Based on the federal jobs report, layoffs and terminations had been little modified at 1.3 million in July. With regards to combination information, the reported layoffs are fairly negligible and fewer than what they had been earlier than the pandemic.

It’s additionally essential to notice that different indicators — resembling size of unemployment — aren’t growing. Because of this even when individuals are getting laid off, they’re more likely to get snatched up by different employers rapidly. 

Unevenness within the Labor Market

Regardless of a number of sectors decreasing their workforce, job progress in July and August was notable. Good points had been seen primarily in leisure and hospitality, retail commerce,  skilled and enterprise companies, and well being care. Because of this the labor market stays tight for these industries, persevering with a very powerful hiring surroundings for hospitals, eating places, and resorts.

“Employers in these industries are giving staff second, third, fourth, tenth possibilities. They’re not laying folks off as a result of they’ll’t exchange them. And that is nonetheless a fantastic job seeker’s market,” Pollak says. 

How will all this have an effect on recruiters?

No matter whether or not a recession is formally known as, companies are already beginning to act conservatively. Right here’s how recruiters and TA managers will doubtless be impacted:

1. It’s Going to be a Lengthy Haul

The challenges recruiters face now most likely gained’t resolve on their very own. They should concentrate on constructing processes that maintain up in what remains to be a really tight labor market. 

“We aren’t more likely to see a sudden wave of individuals reentering the labor market. In case your hiring challenges ease, it’ll be as a result of your organization’s enterprise challenges are rising. Say unemployment goes as much as 6% — your online business gained’t be doing nicely and also you gained’t want to rent within the first place. Hopefully, we keep away from that situation,” Pollack says. 

Mockingly, if issues proceed to enhance within the economic system, recruiters will face their present challenges for a chronic time frame.

2. Velocity is Key 

To achieve success in a scorching labor market, recruiters should drive the hiring course of with pace, assuming {that a} sturdy candidate could have a number of affords on the desk.

“Good expertise has a brief shelf life. Recruiters should be extra like salespeople. Whether or not it’s an entry-level opening or an govt rent, you’ve bought to maneuver quick,” Daugherty says. 

Robust firm tradition and a stable employer branding technique that effectively conveys your worth proposition will help pace the method. 

Moreover, constructing out sturdy inside hiring processes additionally helps recruiters work rapidly and extra easily with inside stakeholders resembling hiring managers, HR,  and finance to transform candidates rapidly. 

3. Price range Constraints 

With enterprise leaders feeling stress to cut back prices, recruiters might should work with restricted assets, whilst prices general proceed to extend.

“The price of recruiting has gone up considerably. Key indicators resembling price per click on or price per applicant have near tripled from earlier than the pandemic,” Daugherty says. 

It boils down to provide and demand. Job boards that make use of programmatic promoting have a harder time getting candidates as a result of there are fewer folks out there for a brand new job, making the entire course of costlier. 

4. Make the Most of Know-how

With tighter budgets, recruiters might need to consolidate their expertise stacks or see what they’ll do with out. TA groups ought to look to leverage expertise, resembling synthetic intelligence, machine studying, and automation, to carry out primary duties and scale back prices. 

Whereas some folks is likely to be locked into lengthy contracts with recruitment software program suppliers, it’s much less doubtless that they are going to be including new tech as belts tighten. 

5. Give attention to Retention 

Whereas recruiters can deliver new candidates in, firms should begin to put money into retaining their very own folks. 

Human useful resource departments should do the laborious work of actually listening to what candidates and staff need. Conducting interviews and surveys will help leaders learn the way they’ll enhance the expertise of working for the corporate. Managers must be given instruments to incentivize staff who’ve been performing nicely, particularly at a time when firms are hiring candidates that they might not have thought-about previously.

Right here is a few low-hanging fruit you would possibly take into account: