How hiring changes with changing unemployment rates
Understanding how the unemployment rate affects hiring is necessary to achieving desired results with your recruitment efforts.
While unemployment affects your recruitment strategy, it is important to remember that most job searches’ goal is to hire 1 qualified jobseeker, not 100. In times of very low unemployment, paying attention to the details in your search for candidates is increasingly important.
How does a low unemployment rate affect hiring?
The U.S. has seen a significant decline in unemployment since 2020. The national unemployment rate was 8.05% in 2020, 5.46% in 2021, and 3.6% through July 2022. In most Midwest markets like our home base of Sioux Falls, SD, this has plummeted dangerously low…. Below 2%.
Of course, a low unemployment rate is ideal for the economy, but it has an adverse effect on hiring. Here’s what to expect if the unemployment rate is low:
Recruitment and retention will be more difficult- These are the obvious things to expect when unemployment is low. The pool of unemployed workers that are actively seeking a job is lower, so there will be fewer candidates to fill open positions. Recruiting skilled candidates requires better recruitment practices, higher salary offers, and better benefits packages because the market is more competitive.
- Lost productivity
- In times of low unemployment, you should expect your productivity to decrease if you’re not offering a competitive wage. During these times, highly skilled workers will seek employment at places with higher salaries. If your company can’t match those offers, those employees will likely leave and you will have to fill their position with a worker who isn’t as qualified, leading to an output gap and lower productivity.
- Wage Inflation
- Inflation is typically an outcome of long periods of unemployment. When inflation rises, so does the need for firms to increase their wages. Small-cap firms can struggle with this problem, and often face issues with retention since they cannot continue to match the rising inflation rate.
- Recruiting the Employed. Be Persuasive.
- In periods of low unemployment, your recruitment efforts are going to be mostly directed at employed job seekers, seeking a change in their career, employer, or responsibilities. Your search process needs to be optimized to communicate why your organization and your position would be worth leaving their current role.
Successful hiring is about paying attention to the details. Just like an effective marketing campaign, your recruitment efforts need to start with the end in mind. Your strategy should consist of getting your job in front of the right audience and crafting a detailed, persuasive job ad that converts. Remember, you are only looking for one person to hire… your efforts are about reaching the people that count, not counting the people that you reach.
If you are looking for assistance in your hiring efforts, you can rely on the experts at HIRECLICK. HIRECLICK is an all-in-one hiring system, built to simplify and streamline your entire recruitment process.
