Analyzing labor data and trends is essential to the success of any recruiting leader. You have to know what is going on not only in your labor market but at the macro level to identify potential trends. Every month, I prefer reviewing the data from the Bureau of Labor versus reviewing the analysis provided by most news organizations. I’m more of a “give me the data” versus “give me your opinion on the data” kind of guy. After reviewing some of the major data sets from both the Bureau and LinkedIn, it does have me scratching my head a bit.
What exactly does 2021 have in store for us? Let’s look at the numbers.
Unemployment is down but so is hiring
According to the Bureau of Labor Statics, the unemployment rate declined by 0.5 percentage point to 5.4 percent in July, and the number of unemployed persons fell by 782,000 to 8.7 million. This is a steady decline in the unemployment rate which is usually a good indicator of economic recovery. Many on the news circuit would count this as a win but if you look further in the report, there’s some troubling news.
The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 560,000 in July to 3.4 million. What’s alarming is these long-term unemployed accounted for 39.3 percent of the total unemployed in July. So while the unemployment is going down, we still have close to half of those unemployment struggling to find work. One would think that the number of jobs open being higher than the number of unemployed, especially those who are considered long-term unemployed, that we would see a hiring boom in the last few months.
According to the LinkedIn Economic Report, July’s hiring was less than stellar when compared to June. Across all industries, national hiring in the U.S. was 5.8% lower in July 2021 compared to last month and is still down 5.3% from pre-COVID levels in February 2020. What concerns me more is that the industries with the most notable hiring shifts month-to-month in July were Arts (8.9% higher); Recreation & Travel (3.1% higher); and Hardware & Networking (1.3% higher). These are hardly indicators of economic growth since 2 out of the 3 industries were hit hardest by the pandemic.
Workforce Participation Rate Unchanged
The participation rate is 1.6 percentage points lower than in February 2020. The labor force participation rates is calculated as the labor force divided by the total working-age population. The working age population refers to people aged 15 to 64. The labor force participation rate hardly changed at 61.7 percent in July and has remained within a narrow range of 61.4 percent to 61.7 percent since June 2020. The number of working-age workers increased 1% since December, meaning more are entering the workforce but few are employed.
There is still a huge disconnect between what companies are willing to pay for talent and what candidates are willing to take. Nearly half of job seekers — 48 percent — say they are frustrated because they’re not finding the right job opening, according to a survey from job search site FlexJobs. Some job seekers appear to be lowering their standards for the type of positions they’re willing to accept. Among job seekers, 36 percent have applied for jobs they think they’re overqualified for, while another 56 percent have considered doing so, according to the survey.
The Covid-19 relief packages passed by Congress last year have attracted criticism for their impact on employment, with one state governor telling the Wall Street Journal last month that the benefits’ continuation has “worsened the workforce issues we are facing.” According to the FlexJobs survey, though, only 13 percent of respondents said they have postponed job searching because they received these unemployment benefits or stimulus relief.
The real issue that needs to be addressed is the lackluster pay rates most companies are willing to pay for talent. COVID merely accelerated the issue that has been present all along: Workers need a viable compensation package!
Firms that want to remain competitive in the war for talent should take a look at their compensation ranges against what the market rate is. Companies like Amazon and other giants have made the first moves to increase the minimum rate for its workers yet many companies still cling pay ranges that are not only unmarketable, they’re unlivable for workers.
If you don’t believe me, forty-six percent of respondents to the FlexJobs survey said the jobs they were looking at were too low-paying. Honestly, that’s inexcusable considering the times we are in.
Employers are changing the game
Employers are also changing the game. Last week, CVS announced a new minimum rate of $15 and has removed the education requirement for most of its openings.
The drugstore chain said it will boost hourly pay as soon as this month and ultimately hike its minimum wage to $15 an hour as of July 2022. Its current starting wage is $11, but CVS said about two-thirds of employees already make more than $15 an hour.
As part of that new wage structure, the company said some roles — such as pharmacy technicians and call-center representatives — will get an increase, too, even though they already have higher starting rates. CEO Karen Lynch said the pay increase will strengthen the workforce as it turns pharmacy locations into health-care hubs with a wider range of services, from diagnostic tests to urgent care appointments.
“Attracting and retaining top talent across our businesses is critical as we continue to redefine what it means to meet people’s health needs,” she said in a news release.CVS CEO
According to CNN, Target has announced that it will begin paying the college tuition and textbook expenses for its US-based part-time and full-time employees who attend select schools. The retail giant is following the lead of other large US companies offering more benefits to attract and retain talent in a tight job market. Starting as early as their first day on the job, more than 340,000 employees at Target stores and distribution centers will now be able to choose from 250 programs at over 40 schools and universities across the country, and they won’t have to pay a dollar, Target said in a news release.
- Workers are plentiful, but they have a higher price point than most companies are willing to pay.
- Large employers are changing requirements, pay and benefits to compete for the workforce.
- We still have a huge number of long-term unemployed workers who are not entering the market.
Recruiting has always been challenging but the economic conditions of 2021 continue to make the game interesting. Be sure to keep up with the latest statics and meet with your leaders to determine how you can remain competitive. It’s a great opportunity to show how consultative recruiters can be when the moment presents itself.
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