The US job market today is one of fast pace, vibrancy, and a life that we have not seen since the early 2000s. If you’re a hiring manager and/or HR professional, and you’re tired of getting offers declined or losing your best people, this summary of a recent Wall Street Journal article might shed some insight into what is happening.
Fifty-six percent of 64 business and academic economists polled believe the U.S. will reach a state of full employment within the first half of next year, according to a WSJ survey. Nearly one-fifth of the surveyed economists think the U.S. labor market has already reached full employment. However, the typical wage growth that follows full employment may not happen quickly. Skilled workers will do well, but the wages and the salaries of the average worker will increase modestly over time.
To layer on top of close to or possible full employment, the National Unemployment Rate is now 5.1%, Indiana’s 4.6% and Indianapolis’s 4.2%. But the two statistics that you might really want to be paying attention to (and a bit scared by) are the unemployment rates for candidates who have either a bachelor’s degree or higher (2.5%) or some college or associate degree (4.2%).
For those employers looking to attract, hire, and retain college-educated candidates, 2.5% unemployment should be a pretty frightening number. Why is that you say? Well, think of all the job opportunities these candidates have, and who isn’t willing to make a career move for a 5-10% pay increase?
I am no economist, but I can tell you as one of the owners of a leading staffing firm in Indianapolis, we have seen this phenomenon of escalating pay for the past 6-12 months. On the temporary side of our business, our pool of qualified unemployed candidates is smaller and smaller, and on the direct hire side, candidates are getting called regularly, monthly if not weekly, with new career opportunities. We continually have to educate and inform our clients of current local market conditions and what they used to get for $20/hour now costs $22/hour, or the Controller they want for $85k a year now demands $90k.
So as an employer what can you do?
- Make sure you know who your “best” employees are and make sure you are talking with them. Learn why they currently work for you and why would they continue. Trust me, it’s not only salary (more to come on that later).
- Truly understand why an “A” job candidate would resign from a job they like and accept a position at your company. Right now, with the headwinds in your face, make sure your compensation packages are competitive if not well above median. What do I mean by that? Make sure you are benchmarking your salary structures against your peers and competition, and if you have not increased your compensation structure by 5-10% over the past couple of years, you probably are in a vulnerable state with retention and recruitment.
Good luck out there. It’s a very competitive world and if we can be of assistance in any way with your staffing needs, we are here to help.