As we monitor the job market we see continuing evidence of a slow jobs recovery. I found the chart below this weekend. The chart shows “Recruiting Intensity” – or the resources that employers are putting into filling vacancies.
As you can see the current recruiting intensity as depicted in this graph above is at historic lows. As I was reviewing the graph the question that came to me was, why? We also believe that this trend may be dangerous and I’ve made some notes of that below. First – why the decline? I (and the authors) believe that there are three primary drivers to this change:
1. High Number of Unemployed – we are in a time with record numbers of unemployed – and many of those falling out of the unemployment rate count as they have been unemployed so long. Due to this “slack” in the labor market, employers may see less risk in passing on candidates as they have in the past. With a large pool of candidates there may be a feeling of less risk in passing on a candidate -” another, possibly better candidate may come along tomorrow”. We continue to believe this is a risky strategy. Employers have worked hard to retain their best employees. While there are still very competent and qualified candidates on the unemployment rolls – we continue to see the pool for highly qualified and competent candidates remaining tight. There remains significant risk in passing on a highly qualified candidate.
2. Economic Uncertainty – Employers continue to show signs of slow hiring and many I talk to cite the uncertainty in the economy, and on the political front. The economy continues to behave in unpredictable ways. The stock markets remain chaotic. Foreign governments are struggling to remain solvent – and there remains the unprecedented risk of US default. Hmm. I can’t say I argue with a very cautious approach to hiring. Governments across the globe must address their debt, and focus on policy that allows for economic and therefore jobs growth, rather than policy that inhibits hiring (see my last point).
3. Job Seeker Job Search Length – government data is showing that job seekers are spending less time on their job search. Data from the US Bureau of Labor and Statistics shows that job seekers spent 15% less time in 2009 on their job search than in 2008. Why? I see two main reasons. The first is frustration in the length of the search. As the job search lengthens job searchers get tired of the search. Secondly – for the first time ever there is 99 week incentive NOT to actively look for work. With unemployment benefits lasting 99 weeks there is a long time before there is a monetary incentive to look for work, or take a position paying less than the last job held. Once unemployment benefits start to run out, and the US government realizes that the length of benefits is a hindrance to job growth, more candidates will begin accepting positions for which they are qualified.
We continue to see evidence of a slow jobs recovery. With historically high levels of job seekers we also believe that the needs for professional recruiting services are higher than ever to screen through the unqualified or under qualified candidates to find those that are best suited for positions with our clients.