After the initial market shock of pandemic shutdowns wore off, the US swiftly entered into a candidate’s market. Demand surged across industries and job functions, causing firms to rapidly hire at more competitive rates. With more freedom to work remotely, and thus more available opportunities, employees became more empowered to negotiate for flexible work arrangements and strong benefits. This phenomenon has persisted for two years now, with candidates holding the upper hand in the job market.
However, as the economy begins to cool and many worry about sliding into a recession, we must re-evaluate the situation. Hiring dynamics change immensely during a recession, with employers finding more leverage in a growing pool of candidates.
Let’s take a look at the trends shaping the job market today and what they could signal for the future of hiring.
Current Job Market Trends
According to recent reports, we are still in a candidate-driven job market. Vacancies and voluntary departures remain remarkably high, while unemployment and layoffs remain low. However, job openings – while still historically high – have been decreasing since March. Resignations are exhibiting a similar cooling trend. On a separate plane, inflation continues to rage, hurting consumers and businesses alike. While conditions are currently favorable for candidates, job market trends could be evolving before our eyes. If the economy experiences a recession in the coming years, hiring will take a hit.
The Potential Impact of a Recession
It was announced in late July that the US experienced two consecutive quarters of GDP decline. This metric has served as a defining marker that the economy could fall into a recession.
While debate exists as to the efficacy of this definition, the fact remains that the economy is on shaky ground.
Hiring during a recession is infrequent and unreliable. During times of crisis, businesses are much more likely to pursue layoffs and cost-cutting rather than team expansion. If current job market trends continue and the US slides into hard economic times, this could cause a hiring freeze. Power will gradually migrate from candidates to employers.
In such a situation, employers will be able to offer lower wages and less competitive benefits packages, if they hire at all.
Where We’re Headed and How to Prepare
The economic outlook is very touch-and-go and the experts vehemently disagree on the most likely outcome. Again, as it currently stands, the market remains favorable but cooling. Whether the Federal Reserve can execute a “soft landing” – i.e., get inflation under control without causing economic hardship – remains to be seen. Candidates and employers have no choice but to make necessary preparations and monitor the situation week by week.
For job seekers, now is an excellent time to take advantage of the lingering candidate’s market and pursue a job search. A recruiter can even help you begin a passive search while you continue working in your current role.
If you feel confident in your current role, strive to add value wherever possible. Those who are indispensable to their teams will be the last to go during a season of layoffs. Upskill in your downtime and pitch in to make your supervisors’ lives easier.
Employers should refrain from making hasty hires. Keep your finger on the pulse of the market and pay attention to shifting hiring dynamics. If you can afford to wait, you may find it more fruitful to hire in a few months, depending on how the situation evolves.
Stay Current With Fresh Industry Insights
The dedicated recruitment team at Turn2Partners can help you navigate your hiring challenges, whether or not a recession disrupts your course. We will make sure you are up-to-date on the most recent job market trends and help you prepare to negotiate effectively. Coming out on top of an uncertain market is magnitudes easier with the right partners; work with executive search allies who have your best interest in mind and will work tirelessly for your benefit. Get in touch with a team member today to learn more.