The US economy is finally coming up for air. States that imposed lockdowns for the COVID-19 pandemic started lifting restrictions on businesses and public spaces in May 2021, and many major cities have reopened.
However, as the New York Times observes, “it’s a weird moment for the US economy.”
With people getting vaccines, spending more money, and returning to offices, the job market is going through a period of unprecedented adjustment.
Businesses are looking to hire more workers quickly, but employers face a disjointed market where active candidates are not as keen to take on new roles and a large number of passive candidates remain in their current jobs because of economic uncertainty. Here are a few trends recruiters should be aware of while looking to hire in the post-pandemic environment.
Macroeconomic trends affecting recruitment and hiring in the post-pandemic economy
1. Labor market fluctuations
What’s making hiring in 2021 so tricky? In a word—uncertainty. As the US reopened and more people got vaccinated, most economists thought people would return to work quickly. However, the second quarter of 2021 was challenging for the labor market.
According to the US Bureau of Labor Statistics:
- In April, 269,000 jobs were added to the economy, well below the previous month’s job gains, and the unemployment rate rose to 6.1 percent.
- In May, the economy picked up a little steam with 583,000 jobs added, but still below the growth estimated by economists, while the unemployment rate fell to 5.8 percent.
- In June, 850,000 jobs were added to the economy, surpassing estimates. However, the unemployment rate rose to 5.9 percent.
- Despite the recent job gains, the U.S. labor market is still 6.8 million jobs short of pre-pandemic levels.
Source: Bureau of Labor Statistics
While overall numbers show positive developments, they are still below what economists expected at this point in the recovery.
“If you compare this recovery to that of other recessions, this is the fastest ever,” says Julia Pollack, Labor Economist at ZipRecruiter. “All things considered, it’s not bad. It’s just not as spectacular as we might hope.”
2. Labor shortages and supply constraints
Despite an improvement in the overall unemployment rate, there’s still a labor shortage in the US. Labor shortages occur when workers are unavailable, or in this case, not rejoining the labor force as quickly as expected.
In June 2021, about 61.6 percent of the United States civilian labor force participated in the job market.
Source: US Bureau of Labor Statistics
While economists consider this shortage a temporary problem, businesses looking to hire quickly may have trouble finding new workers.
“Labor force participation has been flat the last couple of months. So even as vaccination rates rose and things reopened, labor force participation coasted along, surprising many people. The labor market now has more than 3 million fewer people than before COVID,” Pollack says.
3. The impact of unemployment benefits
The two record unemployment benefits packages passed by Congress in the summer of 2020 and winter of 2021 helped keep the economy going during the pandemic. The benefits have also allowed workers, especially those in low-wage, high-turnover jobs, to reconsider their career progression.
“Many people are investing in their skills by taking online courses, exploring new industries, freelancing,” Pollack says. “There is also evidence that self-employment is on the rise and new business applications are growing at record highs. Some people may be using this time to become more valuable job seekers of the future and to hold out for better opportunities.”
Source: US Census Bureau
4. The average minimum wage is low and stagnant
The federal minimum wage is $7.25 per hour, unchanged since July 2009. If the minimum wage were aligned with the increase in productivity over the past 50 years, today it would be over $24 per hour.
Employers who have increased their hourly wages have found it easier to attract and hire new workers.
“Compensation is a huge component when changing jobs. We pay above minimum wage for all of our positions regardless of the state we operate in,” says Kerry Moore, vice president of talent acquisition at ZoomInfo. “One of the things that sets ZoomInfo apart from other employers is that we offer equity to everyone, including new hires. Typically, equity and stock options are reserved for those that are higher up in the organization. By offering each new employee ownership and a piece of the organization, we offer them longer-term compensation.”
5. An oncoming wave of resignations and early retirement
In 2020, there were close to 6 million fewer resignations than in 2019. This suggests that during the pandemic, many workers who might have resigned and changed jobs stayed put due to economic uncertainty or the fear of unemployment. As things return to business as usual, these passive candidates are starting to move.
“Right now, it is a candidate’s market. Most of the candidates we’re engaging with have multiple offers. This creates the need to have a lot of speed around our hiring process because we don’t want to miss out on a great candidate. It’s forced us to be faster at determining the quality of a candidate and do it as quickly as possible to get that offer out,” Moore says.
Additionally, many people who were close to retirement age have decided to take early retirement rather than rejoin the workforce. According to a Pew Research Report, 28.6 million Baby Boomers reported that they retired in the third quarter of 2020 — 3.2 million more than the 25.4 million who retired in the same quarter of 2019.
6. Demand for work-life balance
Working from home during lockdown exposed millions of people to remote work for the first time. Many enjoy the flexibility it provides and have thrived due to better work-life balance.
A survey by Harvard Business School found that 81 percent of professionals either don’t want to go back to the office or would prefer a hybrid schedule. Employers who can offer this kind of flexibility are more likely to find the right candidates.
“Employers and job seekers both want remote work to stay on into the future and want the shift towards remote work to last because they experienced productivity benefits,” Pollack says. “It’s something people are now more comfortable demanding. Many companies are now making permanent moves towards remote work. They’re reducing their office footprints, they’re reclassifying workers as remote or hybrid workers.”
7. Child care shortage
The pandemic was especially difficult for parents of young children. More than 26.5 million people—16 percent of the American workforce—depend on child care to be able to work. Child-care programs faced massive and unprecedented staffing shortages, leading to fewer spots for kids and long waiting lists. Due to antiquated notions of caregiving responsibility, nearly 3 million women left the workforce last year.
Companies that can offer or assist with the childcare needs of their workers have a huge advantage in recruiting.
Recruiters play a key role in hiring
It’s important for recruiters to be aware of where the market stands now that more organizations are ramping up their hiring. Recruiters who are well-informed about the overall labor market situation and their specific industries come across as more credible to candidates. Understanding hiring trends in the post-pandemic labor market can help to guide your strategy when looking for the right candidate.