Labor Market Update: Inflation Impacts the Hiring Market?

With layoffs making headlines, the U.S. jobs report continues to surprise us, with the labor market adding 315,000 jobs in August coming off a stellar 528,000 newly created jobs in July. The past 60-days of job growth represents an acceleration from the 398,000 jobs added in June 2022. In another unexpected move, the unemployment rate ticked up to 3.7% from a 50-year low of 3.5% after four months at 3.6% – the same as a pre-pandemic low in February 2020.

Recession or Opportunity? You Decide. 

The strength of the job market is in contrast with other economic indicators, which show the U.S. economy shrinking during the first six months of the year. That's often a sign of recession, but that's hard to reconcile with an economy that's added more than three million jobs this year. On one hand, we have layoffs and concerns about inflation and what that means for the economy. On the other, we have a nearly two-to-one ratio of open jobs for every job seeker. In fact, the ratio of job openings to job seekers increased by 74.5% year-over-year, its highest level since the BLS started reporting this data in December 2000.

With that out of the way, a rapidly changing market, supply chain issues, and corrections that are happening in the global economy do mean that some industries are thriving, while others are experiencing an extremely challenging sales and hiring market. Because these things are happening simultaneously, some economists predict that inflation is likely to drive workers back to the job market, but it’s really like trying to predict what the weather will look like on an exact day four months and six days from now. It’s hard to get specifics.

What about the layoffs? Yes, layoffs are happening but it’s not impacting the unemployment rate significantly. The Wall Street Journal reported in August that “People losing their jobs are rapidly landing interviews, multiple offers and higher pay, a dynamic of the tight labor market that is holding down unemployment totals.” (The Surprise in a Faltering Economy: Laid-Off Workers Quickly Find Jobs - WSJ)

Turning Layoffs into Payoffs

Think about it like this: Companies that are making headlines about layoffs are the really large ones. These large employers that are laying off skilled employees are doing a favor for mid-sized and smaller companies. Their negative reviews are a positive for your company’s reputation – as long as your own brand is on point. 

There’s no magic formula to make your company recession-proof, but even companies in industries with extreme labor shortages (hellooooo healthcare, logistics, food service and education) can ensure some stability by taking steps to improve employee retention, employer brand and reputation, and nurturing robust talent pipelines of the top talent that are on the market because [insert massive global company name here] just did a round of layoffs. 

What we do know is that the labor market is expected to continue to be tight for most employers. And if you’re not competing, you’re already losing. Or to put it another way, “If you ain’t first, you’re last.” (Ricky Bobby, Talladega Nights)

What turns your company into a contender is going to be your brand, your employer reputation, AND your recruitment marketing strategy. Double down on what works, hit the brakes on what doesn’t, rinse, and repeat. Drive that strategy like a V8 with a cougar in the back seat. We’re not waving flags or popping bottles, but here at Talentcare we do know what it takes to win and we can help you get there. Drop us a line or slide into our DMs.