As industries and organizations across the country move through various stages of reopening, one unprecedented trend has emerged: as unemployment surged over the past several months, the number of active job seekers declined. This dynamic is a direct result of the pandemic, but it raises important questions for business owners and talent acquisition leaders about what this means for the talent market — both as organizations reopen and in the months ahead.
Before the pandemic, unemployment hovered around 4%, and many U.S. industries experienced sustained talent shortages. Demand for skilled workers frequently outpaced the number of active job seekers, reinforcing what we often heard described as a job seeker’s market, where organizations had to compete aggressively to attract and retain quality candidates.
Today, however, some talent acquisition and HR leaders suggest we may be entering a more employer-driven market — one where organizations can be more selective as they return to hiring.
That assumption, however, is likely to be short-lived.
Here’s why talent acquisition leaders and business owners should remain focused on proactive sourcing and building a continuous pipeline of candidates, regardless of short-term market shifts.
To better understand what’s happening — and what lies ahead — we analyzed data on active job postings and job seeker activity across five of the largest U.S. industries: Healthcare, Technology, Construction, Retail, and Production/Manufacturing.
Not surprisingly, job postings across these industries declined sharply in April 2020, dropping 26.9% year over year. Historically, economic downturns are accompanied by an increase in active job seekers. However, the data tells a different story this time.
By April 2021, active job seekers across these same industries had declined by 28.6%, defying traditional labor market patterns and underscoring the complexity of today’s talent landscape.
Explore the data in more detail in the infographic below — click to expand and download:
While it’s common to see job postings decline during periods of high unemployment, it is far less typical to see such a significant drop in active job seekers. Historically, rising unemployment correlates with a sharp increase in people actively searching for new work. The current data breaks that pattern.
These unprecedented results suggest that individuals who were actively job searching before the pandemic — as well as those who lost their jobs during it — are not reentering the job market at expected levels. There has been widespread speculation around why this is happening, with several contributing factors likely at play, including:
Health concerns and fear of returning to in-person work
Lack of reliable childcare options
Mental health challenges and burnout
Favorable or extended unemployment benefits
Choosing to remain in current roles (even if previously job searching) due to uncertainty and risk aversion
With active job seekers declining and many passive candidates opting to stay put, the labor market may be shifting into a new version of a candidate-driven market. Even before the pandemic, demand for talent frequently outpaced supply. Now, employers must navigate additional constraints — such as health concerns and caregiving responsibilities — that further tighten the available talent pool, at least in the near term.
As phased reopenings continue across many states, demand for talent is expected to rebound across industries. A survey released by the Federal Reserve Bank of Philadelphia suggests economic recovery could begin in Q3, with job gains averaging 2.3 million per month. Additional signs of hiring momentum are emerging as well. According to Glassdoor, the rate of weekly declines in job postings slowed to 1.3% as of May 11, 2020, down from 7.8% in March.
The question now is whether organizations and talent acquisition leaders are prepared for the less-visible hiring challenges that will follow the pandemic. Hiring demand is likely to return in uneven waves across industries, and many pre-pandemic challenges may intensify. Overall, the talent landscape ahead is poised to look markedly different from anything we’ve experienced before.
Some of the biggest pre-pandemic challenges such as job syndication and how do I make sure my job postings are being seen by the right audience will now be overshadowed by things like how we communicate and ensure prospective candidates that our company is a safe place to come to work. You’ll need to craft the right employer brand messaging and align your practices with CDC regulations to ensure that your employees feel safe in your office environment.
With many prospective job seekers having concerns over their health or the health of a family member and a vaccine that will probably not be available for at least another year, organizations will need to get creative in their messaging to make prospective candidates feel that they are offering their employees a safe working environment.
This brings up another challenge, as we’re now seeing statistics that say work-from-home (WFH) will remain a trend for many organizations into the foreseeable future, especially as many organizations had moved toward a more open working office environment over the past 5 -10 years. Global Workplace Analytics estimates that 25-30% of the workforce will be working from home, multiple days a week by the end of 2021. With increased opportunities to work from home, talent will become increasingly competitive amongst organizations that are unable to offer a virtual work option.
For organizations shifting to include work-from-home options, talent leaders and hiring managers are now looking at a new set of criteria as they evaluate candidates, from virtual engagement to capabilities in technology to productivity in a virtual setting. Potentially, you are now open to an even wider geographic location of candidates than before, so you have to shift your sourcing activities to accommodate that increased candidate pool.
In a talent-driven market, we know that passive candidates are imperative to a strong talent acquisition strategy. Approximately 70% of candidates are passive job seekers, while only about 30% are active job seekers. Based on the data that we’ve seen amid the pandemic with active job seekers declining, you can be assured that passive job seekers will be even more cautious to make a career move with the continued uncertainties as a result of the pandemic.
In fact, in a recent study conducted by ADP Research Institute, 70% of workers surveyed in March-April 2020 felt confident that they would retain their jobs for at least the next month. This could mean that organizations will have to rethink their passive recruiting strategy. It’s not enough to be a great place to work and have great benefits, you will now need to actively engage with available candidates to ease fears that if they take a gamble in making a career move right now, that it’s the right one.
As organizations begin to get back to work, use this time to enhance your recruitment strategy rather than wait till the demand for talent again outpaces the supply. If your digital recruitment marketing strategy is not your organization's strength, you need to take action now.
First impressions matter and for most organizations that impression is made digitally, especially to prospective candidates. In today’s world, and perhaps even more so in the post-pandemic environment, it is imperative that you have processes and technology that can easily adapt to changing market needs enabling your organization to appeal to prospective candidates in several ways:
Your goal should be to create a great virtual candidate experience.
As we mentioned before, don’t wait for demand to again catch up to supply – we all know it will. Use this time to actively build your candidate pipeline and build relationships with those candidates who would make a great addition to your team and help your business evolve in this climate. The best organizations are constantly sourcing for quality candidates and top grading their current workforce and continually upgrading lower-performing employees with more qualified talent.
Even if you aren’t hiring today, you should identify the talent you need in your organization and develop those relationships to secure those candidates when the need arises. While other organizations wait until they have an open role to start sourcing – you will be prepared with A+ talent that will help you navigate and transform your business to meet market changes.
Don’t wait for supply to get back to its pre-pandemic rates to get a jump on your recruitment strategy. Define your recruitment process today by reading our world-class recruitment guide.