For recruiters, 2022 was… a year. Starting off still reeling from the Omicron variant, ending with record-high inflation and interest rates – at times, you may have felt you were stuck on an economic rollercoaster. So, what exactly happened this year? And what does it mean for the year ahead?
Labor Market Pains
The recruiting landscape has been confusing this year, mostly because of a super tight labor market. Job openings have far outpaced the number of unemployed people this year. Though openings are coming down slightly, they remain historically high while unemployment remains historically low.
The quits rate, too, hit new extremes this year. Workers felt their power in the tight market and were not afraid to utilize it.
As the workforce tightened and workers switched jobs, their wages increased. This year saw some of the most robust wage gains in decades – and yet it is still not enough to keep up with record high inflation (but we’ll get to that soon).
And, just as workers are feeling their power, companies are feeling their lack thereof. Layoffs – represented here by claims for unemployment insurance – have returned to their historic lows hit in 2019. Though they have risen in recent weeks, they remain very low.
And with all these labor market pains – recruiting costs have stabilized at high levels. Recruiters are bearing the brunt of this tight world of work, and the cost per application is just one measure of that. But these woes are not the only thing putting upward pressure on CPAs this year.
The Underlying Problem: Rising Prices
If you’ve stopped at the gas pump or the grocery store this year, you’ve probably noticed that prices have risen. Throughout 2022, upward pressure on prices created the worst period of inflation in 40 years. Currently, the consumer price index is up 7.1% from the year before.
To fight inflation, the Federal Reserve has been engaging in a tightening policy, rapidly rising interest rates in attempts to slow the economy and therefore inflation.
The Fed is particularly worried about the tight labor market described above. The Fed is attempting to “soften” the labor market – bring down demand for labor in order to lower services prices that have risen to worrisome levels. In their most recent economic projections, Fed officials revealed that they expect unemployment to rise to 4.6% in 2023.
The Results of Worker Power: Pay Transparency and Working From Home
Increased worker power has led to developments in the norms of recruiting. Pay transparency is sweeping the nation. Several states and cities have passed laws requiring pay ranges be included in all companies’ job postings.
Key findings from Recruitonomics on the Colorado law and companies that post pay ranges voluntarily suggest that these laws are not as bad for recruiters as they may seem.
In Colorado, the “Equal Pay for Equal Work Act” increased labor force participation rates in Colorado compared to Utah, a similar market. At the same time, companies actually withdrew job postings in the area. For recruiters, that means competition in these markets is declining right as more candidates are looking for work.
Considering over ten million job postings, the latest research showed that key recruiting costs actually decreased when pay ranges were included in the title. Workers like knowing exactly what they are applying for – so it makes sense that it’s easier to get job seekers to click on ads that are telling them just that.
The final trend in 2022 is actually leftover from the COVID-19 pandemic. Work from home surged in the beginning months of the pandemic for reasons connected to the virus. But, even as the threat receded as vaccinations became more prevalent, working from home persisted.
The majority of workers still commuted to their offices in 2022 – but 12.8% of workers still worked from home in November, 2022. The hybrid share – those who spend some days in the office and some at home – is even higher, at 27.4% in November. Work from home is not as prevalent as it was two years ago, but some workers are still enjoying this perk.
These are, of course, not the only trends that shaped 2022. Consumer demand shifted towards services and away from good as Americans were able to get back into the world. That, of course, shifted demand for labor in sectors touched by these trends. But, these trends in particular helped create the recruiting difficulties in 2022.
Many of these trends are set to continue in 2023, but to a lesser degree. Inflation is likely to subside because of the Federal Reserve’s actions and naturally receding pressures in housing and goods prices. If the Fed has its way, the labor market will soften as well. But, many companies still have a long way to go on their recruiting challenges. For more information on trends in 2023, download Appcast’s Recruiting Trends for 2023.