The last few weeks of the year tend to see a dramatic drop in hiring activity, but this year might be different.
Despite inflation, rising interest rates, and mass layoffs at large tech firms some experts believe hiring activity will actually remain relatively strong through the holiday season. The past year saw unprecedented talent shortages across nearly every sector, with the Bureau of Labor Statistics reporting over 11 million open positions nearly every calendar month. By comparison, the number of open positions hit a two-decade high in December of 2018 when it reached 7.3 million.
Despite a slight dip in demand in August, the latest report, published Nov. 1, found that open positions had risen again to 10.7 million through the end of September, suggesting demand remains well above pre-pandemic levels. Furthermore, according to the latest BLS data, unemployment reached 3.7% in October, and has remained relatively unchanged since March.
“We’re actually seeing a robust number of jobs being pushed into our system, our hiring team partners have not let off the gas, and typically there is a seasonal dip; we haven’t seen that as of today,” says Dave Fisch, the CEO of Ladders, a job platform for six-figure roles. “We really aren’t seeing any slowdown, considering all of those insular issues going on; we’re actually seeing some acceleration.”
According to Fisch the last quarter of the year typically sees a significant decline in hiring as organizations re-evaluate their staffing needs for the New Year, but says thus far most sectors are seeing equivalent or greater levels of activity compared to Q3.
“The job market has proven resilient over the last couple of months,” adds Sinem Buber, the lead economist for ZipRecruiter. “There are still businesses continuing with their hiring plans aggressively, and there are a lot of opportunities out there, especially for tech talent right now.”
Buber adds that recent headlines are likely giving job seekers the wrong impression about the state of the job market, adding that it remains heavily weighted in the candidate’s favor.
In early November, Facebook parent company Meta announced the latest in a series of layoffs at high-profile tech companies, with the company letting go of 11,000 workers, or about 13% of its staff. The announcement came just days after layoffs by fellow tech employers Twitter, Lyft, and Stripe, among others.
“Right now the layoffs are concentrated in technology; they’re not very widespread across the economy,” says Buber. She explains that the sector tends to be more sensitive to rising interest rates, but adds that some of the layoffs we’re seeing today are the result of “employee hoarding” earlier in the year.
Furthermore, tech workers tend to have highly transferable skills, meaning that the recently laid off are more likely to land on their feet more quickly than those employed in other sectors. According to a recent ZipRecruiter study 37% of laid off tech workers find another job in less than a month, and 79% find one within three months of being let go.
Buber adds that candidates are likely to remain in the driver’s seat for the foreseeable future, despite inflation and rising interest rates, as a result of longstanding macro trends. “Because of a lack of potential workers the labor shortages will not be resolved any time soon—certainly not in the next couple of months,” she says.
She’s referring to the demographic shifts that economists had been sounding the alarm over for years, and which were further exacerbated by the pandemic.
“Ever since the first Baby Boomer turned 55 [20 years ago], U.S. adult labor force participation has declined,” says Kathryn Edwards, an economist at the RAND Corporation and a professor at the Pardee RAND Graduate School. “They are a very large share of the workforce that has started to go away, so the overall labor participation rate in the U.S. has been declining for 20 years.”
Edwards adds that this gradual decline wouldn’t be as dramatic were it not for the pandemic, which took even more Americans out of the workforce, while reducing access to alternative labor sources.
“That coincided with a shift over the last five years toward restricting immigration, which the pandemic accelerated,” she says. “The pandemic was also a mass mortality and a mass disability event; it is estimated that one to two million Americans are not working because they have symptoms of long COVID.”
The pandemic also saw a dramatic decrease in workforce participation by women, and the share of female workers remains below pre-pandemic levels.
“In terms of those women who could work, immigrants who were coming in to replace workers, and people retiring; all three of those trends were greatly accelerated by the pandemic,” says Edwards. “The overwhelming consensus from the last jobs report is that the Fed’s inflation-fighting interest rate rising hasn’t hit the labor market yet; we’ve added jobs, unemployment is low, and so this would be considered a strong labor market.”
(14)
