There are currently 8 million job openings in the United States and a record number of individuals quitting their jobs. The ways we work have shifted in historic ways, and the repercussions from those shifts will resonate for years.
It’s pertinent for organizations who hire or help others hire to reevaluate the hiring and recruiting strategies they’ve been using to set themselves up for success moving forward.
This post will examine how we got here and how this massive talent migration will define our new recruiting reality. More specifically, we'll dive into:
Here at HiringThing we have our fingers on the pulse of what's happening in the world of recruiting. Check out our other #HiringTrends content for more scoop.
In an October 8, 2021 speech on labor statistics, President Joe Biden extolled how the unemployment rate was below 5% for the first time since March of 2020. He cited this as “a sign that our recovery is moving forward even in the face of a COVID pandemic.” Similarly, the Bureau of Labor Statistics reported that “job growth was widespread, with notable gains in leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing.”
While this makes it sound like things are good for the labor market, there’s a discrepancy between how statistics are collected and what businesses are actually facing. Take, for example, headlines reporting what companies have been going through the past few months.
“3 mismatches between what employers want and what workers are looking for amid the labor shortage” is a Business Insider headline from November 8, 2021. “There are 8 million open jobs as the quitting spree continues,” is from CNBC on December 8, 2021. “More quit jobs than ever,” was the New York Times on January 4, 2022.
These headlines tell a different story. Despite a low unemployment rate, businesses are struggling to find and retain job applicants. To understand this discrepancy, it’s vital to know how the government defines “unemployment.”
The Bureau of Labor Statistics classifies those eligible for the workforce into three categories:
There’s a historic rise of those not in the labor force right now. The pandemic has exacerbated this steadily building trend. The individuals who aren’t in the labor force aren’t working but aren’t actively looking for a job either. They aren’t employed, but they aren’t unemployed.
This talent migration isn’t going away just because “unemployment” rates are returning to pre-pandemic levels. This shift to not actively being part of the labor force is the new recruiting reality. Those who hire must adjust their approach and philosophies to acclimate and succeed.
“Labor supply remains an important constraint and an issue that may very well not get resolved in a short time horizon.” - Ellen Zentner, Chief U.S. Economist at Morgan Stanley
To understand and accommodate the new realities of recruiting, it’s vital to understand:
Change can be frustrating, but it’s our one real constant, and many of the changes happening now are empowering to employees. If harnessed correctly, they're changes that can usher us into an era of unprecedented creativity, productivity, and satisfaction on the work front. It’s an exciting time to be working!
Data collected by the Federal Reserve Economic Data (FRED) shows how we’ve been building to this current labor shortage. Viewing these charts helps us visualize our new recruiting reality’s creation.
As demonstrated in the chart above, the number of U.S. job openings fell in conjunction with spring 2020 COVID-19 pandemic job closures and losses. It’s been steadily increasing since April 2020 and has recently surpassed pre-pandemic numbers. This past August, job openings reached 10 million, a record high.
This next chart demonstrates how the number of employed individuals dropped alongside the number of job openings in March 2020. While the number of job openings has surpassed pre-pandemic levels, as demonstrated in the previous chart, the number of employed individuals has yet to reach what it was when 2020 began.
This chart provides historical context for these shifts in employment. Job openings have been growing steadily over the past decade. Again, there was a sharp decline during the pandemic’s onset, but job openings rose drastically after things leveled out in the summer of 2020.
The number of employed individuals saw the same steady growth as job openings over the past decade. However, instead of spiking drastically, the number of employed individuals hasn’t recouped to pre-pandemic levels.
This next chart helps us visualize the journey of individuals who want to work but are currently unemployed. After a sharp spike in unemployment in the spring of 2020, it’s steadily been declining, bringing current unemployment down to just about the pre-pandemic level. It’s important here to note once more that it’s not unemployed individuals causing this massive talent migration. It’s historic numbers of individuals choosing not to seek employment.
It’s not unemployed individuals causing this massive talent migration. It’s historic numbers of individuals choosing not to seek employment.
Unemployment has been declining since 2011. Just before the pandemic, unemployment was at its lowest since 1969.
Labor force participation rates have been trending downward since 2011, and it seems the pandemic was the catalyst to send this decrease into overdrive.
“Quitting gets a bad rap in life, as it’s associated with pessimism, laziness, and lack of confidence. In labor economics, however, quits signify the opposite: an optimism among workers about the future; an eagerness to do something new; and a confidence that if they jump ship, they won’t drown but rather just land on a better, richer boat,” wrote Derek Thompson in his June 2021 Atlantic article, “What Quitters Understand About the Job Market.”
The Federal Reserve Economic Data (FRED) chart above shows how the number of individuals quitting their jobs has steadily risen from 2012 to 2020. This dropped during the spring of 2020 when people were generally uncertain and holding onto roles while we collectively waited to see what our new normal would become.
In 2021, the rates of individuals quitting their jobs spiked to the unprecedented levels responsible for Texas A&M professor Anthony Klotz naming this phenomenon “The Great Resignation.”
Employers once had the upper hand. Wages were often stagnant, long hours required, and office perks surface-level distractions. While forward-thinking organizations began giving their workers more autonomy, flexibility, and a better work-life balance, these changes were more minority than majority. They do, however, represent what will inevitably become the status quo.
UC Berkeley economist Ulrike Malmendier suggests that the pandemic, coupled with the rise of flexible, remote work, has caused a reexamination of the values and priorities that guide employee decisions.
53% of employees who were happy with how their employers handled and supported them during the pandemic are still actively looking to jump ship for better opportunities. Due to a combination of reasons, it seems as if individuals have finally put their wants and needs before their employers.
Organizations will have to figure out the best ways to address this trend. As writer Bryan Lufkin says in a BBC piece titled “What We’re Getting Wrong About The Great Resignation,
“It’s tempting to trumpet the Great Resignation as a sweeping event that will uniformly change labour conditions. But because the factors driving resignations are so different, if changes do come, they’ll likely look different depending on the sector and the types of jobs.
Some companies might cater more towards white-collar workers’ demands for continued pandemic-era flexibility, like remote work; other companies in service sectors might respond with long-overdue improvements to conditions or higher wages.”
Since workers are leaving in unprecedented numbers, organizations should pinpoint and reevaluate what in their industry, organization, or office is causing employees to leave and begin to strategize changes to make them stay.
Workers leaving jobs without having another position already lined up should tell organizations that this isn’t a fluke. “The Great Resignation” isn’t letting up anytime soon.
Loosely speaking, half of the people who lost jobs during COVID are still actively looking for work, while the other half are not.” - Jesse Edgerton, Economist at J.P. Morgan
Data collected by Indeed shows only 10% of American job seekers are actively and urgently looking for work right now. Closed schools coupled with the reopening of businesses, fear of the COVID-19 virus, migrations from large metropolitan areas to smaller cities and rural areas, safety concerns for family members and dependants, and government assistance all contribute to the decline of individuals not seeking employment.
The pandemic isn’t over yet. The highly transmissible delta and omicron variants are still wreaking havoc across the country. COVID-19 is still a significant source of fear and doubt among Americans. Recent survey data from YouGov reports more than 50% of American adults are still “very” or “somewhat” scared of contracting COVID-19.
The pandemic has caused many households to adapt their household budgets and resources to one working partner. These households may have decided this new reality works for them.
Individuals already working higher-paying jobs could have increased the financial cushions they already had due to an increase of stimulus checks, decreased social spending, and government assistance and can afford to be picky about their return to the workforce.
While some families adapted to having one income by choice, many individuals have stepped out of the workforce to care for children or other dependents. Childcare is more expensive and less available than ever. So are home health services, which may have prompted more individuals to take on a caretaker role.
Some businesses have blamed unemployment payments and government aid for the labor shortage. While these programs have kept many families afloat, they weren’t equal to a steady income for most individuals. While unemployment payments are not the main reason people choose to stay away from work, they are also not insignificant.
The pandemic caused many people to slow down, spend time at home, and reevaluate whether or not their current pace is a good fit.
As writer Joanne Lipman says in a June 2021 piece titled “The Pandemic Revealed How Much We Hate Our Jobs. Now We Have a Chance to Reinvent Work,”
“The deep unhappiness with jobs points to a larger problem in how workplaces are structured. The line between work and home has been blurring for decades—and with the pandemic, obliterated completely for many of us, as we have been literally living at work.”
Many individual Americans realized that returning to the way they’ve been working wasn’t conducive to their well-being and pursued better options.
One-third of small business owners in every industry report having open positions they couldn’t fill for at least three months. While some industries, like hospitality and public education, are struggling more than others, all industries feel the results of the current hiring crisis.
Since the labor shortage is felt among all industries, all industries must adapt to the new recruiting realities. In 2011, Harvard Business Review published an article titled “Adaptability: The New Competitive Advantage.” If organizations didn’t listen then, they must now.
It's evident changes need to happen for businesses to succeed during our new era of recruiting. Our suggestions for changes that can be enacted almost immediately include:
“Just-in-time” scheduling limits the availability of employees who have dependents, school, second jobs, or other personal considerations. The Brookings Institute defines “just-in-time” scheduling as one where:
Workers typically receive their schedules on short notice and may have their shifts changed or canceled at the last minute. Employers may put workers on call with no promise that there will be work available for them or send workers home without pay if demand has slowed by the time they arrive for their shift.
This model:
To destabilize this model and attract more candidates, employers should:
A recent survey found 74% of employees want to work remotely in some capacity moving forward. While remote work doesn’t work with every business model, offering current and prospective employees a remote/hybrid option will help retain existing employees and attract new talent.
Transitioning to remote work is easier than you think. This guide to transitioning to remote work from remote-work pioneers, FlexJobs, is a great resource to get you started.
HiringThing has been fully remote since our inception in 2012. We have an entire Remote Work Hub with resources dedicated to empowering those interested in creating a remote workforce.
The new recruiting reality means it’s not enough to post a job and hope for the best. Investing in job advertising and recruiting gives you a significant professional advantage.
Glassdoor reports that it costs the average U.S. employer $4,000 and 24 days to find and hire a new employee (and that’s not taking into account onboarding time and costs). Hiring is also time-consuming. Small business owners, for example, spend up to 40% of their working hours on tasks that don’t generate income, which can include communicating with job candidates, sorting through resumes, and scouting the best job boards. Technology that automates and streamlines the recruiting process has saved businesses time and money.
68% of recruiting professionals say the best way to improve recruiting is to invest in up-to-date recruiting technology.
Employers need to adjust the way we think. Our employees aren’t lucky to work for us. We’re fortunate to have them. I make sure to tell my employees that I’m happy they’re working at HiringThing, and I want them to continue being happy working here.
We built our recruiting strategy to ensure we’re hiring individuals we’re confident will make significant contributions to the company. HiringThing wouldn’t have gotten to where it is now without our employees’ hard work and dedication to innovation. I want my employees to continue liking where they work. Retaining top talent is a strategic business move, saving money on retention, onboarding, and training costs.
Our employees aren’t lucky to work for us. We’re fortunate to have employees. HiringThing wouldn’t have gotten to where it is now without our employees’ hard work and dedication to innovation.
LinkedIn reports that internal mobility has been up 20% since the onset of the COVID-19 pandemic. It makes sense. Your employees are already familiar with your mission, product, culture, and in many cases, already experts.
Professional development and mobility are also what today’s employees want. According to the Talent Index, 83% of employees think companies should help with career progression. Still, 44% say their employers don't have talent acceleration programs. If companies don't give their employees tools to grow and opportunities for advancement, they can't expect talent to stay.
Assume top-tier candidates are fielding multiple offers. If you want to remain competitive, you need to move fast or risk losing them to competing offers. This doesn’t mean rushing through the hiring process, but instead being thoughtful and efficient. The longer you deliberate, the higher the chance of missing out and starting from square one.
Applicant tracking systems have been shown to help businesses hire better candidates quicker.
Recruiting is becoming more and more like marketing: organizations need to actively sell their appeal to job candidates.
We must prioritize the candidate experience. Here at HiringThing, we’ve been saying that recruiters and hiring professionals need to reimagine job candidates as customers.
Those statistics don’t reflect positively on organizations, and today’s job seekers won’t tolerate it.
Forward-thinking organizations can do the following to improve their candidate experience.
The HiringThing Guide to Increasing Your Applicant Traffic is an excellent resource for auditing and reevaluating your current recruiting strategy.
Dealing with the new recruiting realities means having the right tools at your disposal. Data shows that adopting an applicant tracking system (ATS) will strengthen your recruiting:
An ATS can speed up the hiring process, automate tasks, designate workflows, and take the stress of organizing and communicating to job applicants off your plate. An ATS will give candidates the four-star hiring experience to positively reflect your organization, encourage them to recommend the process, and delight your job candidates.
Private-label software is purchased by a company from a SaaS provider and customized with user-friendly solutions like tailored workflows and single-sign-on capabilities. A private label ATS has the partnering company’s logos and branding so that end-users believe they’re using proprietary software.
Franchises, Vertical SaaS platforms, ASO & PEOs, HR Solutions, Staffing Firms, and others will private label an ATS when they need a solution they don’t want to build from scratch and/or wish to add value to the brand they’ve worked so hard to cultivate. Private labeling:
Partnering with a private label ATS means choosing which features work for your solution and allows organizations to customize the solution to align best with your and your customers’ goals.
Private label applicant tracking system integration has incredible benefits for HR solutions, franchises, vertical SaaS platforms, staffing agencies, and any organization looking to add value to their HR tech stack. Check out What is a Private Label Applicant Tracking System to learn more about how a private label partnership can grow your organization.
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.