Inflation, Recession, Hiring And Retention
In response to rapidly rising inflation, the Federal Reserve is aggressively raising interest rates. Accordingly we may experience a reduction in the rate of inflation or even a recession, resulting in a reduced number of open jobs in the short term. However, the long-term outlook, driven by demographics, is for a continued tight job market.
The U.S. economy has improved significantly since its low point in 2020 during the Covid-19 pandemic.
- The gross domestic product is almost fully recovered.
- The inflation rate moved up 8.6 percent in the year ended May 31, 2022, which was the largest 12-month increase in over 40 years.
- Unemployment is near a fifty year low and recruitment has become very competitive in an increasingly tight job market.
Increasing Jobs And Decreasing Candidates
According to the U. S. Labor Department Bureau of Labor Statistics 2020-2030 Employment Projections released on September 8, 2021, we are at the beginning of a decade-long increase in the rate of job growth and a decrease in the growth rate of the number of available candidates. During the ten-year period ending in 2030, the total number of jobs is projected to grow by 11.9 million. However, the civilian, non-institutional population and the labor force growth rates are projected to decline, resulting in an increase of about 3 million unfilled jobs by 2030. This is a significant number, especially when considering that according to the Federal Reserve Bank of St. Louis the number of unfilled jobs in the U.S. as of June 14, 2022 was approximately 11,500,000.
The following are some additional highlights from the above referenced articles:
- Healthcare and social assistance are projected to add the most new jobs.
- Computer-related jobs are also expected to have increased long-term demand, in part due to increased requirements for remote (work at home) computing infrastructure and IT security.
- Retail is projected to continue its long-term decline of brick-and-mortar employment and increase in e-commerce employment.
- Real Gross Domestic Product (GDP) is projected to grow 2.3 percent annually, which is a significant increase compared to the prior two decades when GDP grew 1.7 percent per year.
- Productivity is expected to grow at an annual rate of 1.7 percent, which is significantly faster than the 1.1 percent historical growth that occurred from 2010 to 2020 and is more in line with the long-term historical pattern.
Most of the above indicators project a continuation of a shortage of job candidates even if we experience a downturn in the rate of inflation or a recession in the near term.
Improving Hiring and Retention
Employers should be focusing now on how to overcome the serious challenge of not being able to hire the number of employees that they need to grow or even maintain business levels. It is important to review hiring procedures and compensation plans and revise them as required to ensure successful competition for qualified new hires.
It is even more important to focus on retention of current, proven employees. According to Payscale’s well-researched Min-report “Are you at increased risk for employee
turnover in 2022?” average turnover in 2021 was 24 percent, with 9 percent of total turnover being resignations. There are many reasons for employee turnover and some of these reasons may be beyond an individual manager’s control. The following are some suggestions from CNI Recruiting and Best Recruiting that are within the control of most managers and will help to hire and retain employees:
Relationships With Direct Supervisors
The way that a supervisor relates to employees who report to h/h sets the tone for how employees relate to the company. Respect and professionalism are key. Supervisors should recognize good performance verbally, in writing and financially and provide constructive criticism privately when required.
One of employee major concerns is career development and this has become even more important to employees during the pandemic because many careers have lost momentum. When this happens employees tend to look elsewhere for other opportunities. It is important to offer career development courses, mentorship programs, subsidize continuing education, reimburse fees for professional certifications and promote from within.
Many workers want to work remotely, at least on a part-time basis. This desire is being reinforced during the pandemic and is a significant cause of the “Great Resignations.” Some employers resist having employees work off-site because they are concerned about a loss of productivity. However, productivity measurement tools are easily available. Employers who require employees to work in the office on a full -time basis will experience unnecessary resignations.
One of the most frequent reasons for employee resignation is compensation. Forty-four percent of the companies participating in the Payscale report referenced above believe that they are losing talent due to insufficient pay increases. Ensuring that your compensation structure meets or exceeds local market levels is frequently less expensive and always less painful than replacing employees.
This article was published by CNI Recruiting and its subsidiary Best Recruiting as a component of our recruitment educational program. CNI Recruiting and Best Recruiting are recognized as leaders in talent recruitment. If you are searching for a recruiter, you may attempt to find one by using any of the following search terms: Talent acquisition, headhunter, IT recruiter, sales recruiter, NJ recruiter, etc. However, no matter which search term you use, you will find that Best Recruiting or CNI Recruiting is the right choice.
For more information on recruitment and retaining employees in a tight labor market please call CNI Recruiting at (908) 868-7724, email us at [email protected] or fill out the following form: