The job market is showing signs of cooling off from the red-hot conditions of 2021-2022. Recent data from the Bureau of Labor Statistics (BLS) reveals declines in both job openings and quit rates. What do these trends signal about the state of hiring as we head into the latter half of 2023?
In this post, we’ll break down the latest stats and projections to help small and mid-sized business leaders understand where things stand and how to navigate hiring in the months ahead.
Job Openings Drop but Still Historically High
In July 2022, job openings decreased by 338,000 to total 8.8 million, per BLS data. This marks the third straight month of declines after openings peaked at 11.9 million in March 2022.
While cooling off, openings are still high by historical standards. Pre-pandemic in July 2019, openings totaled just 7 million. The current level remains elevated.
Declines occurred across major industries:
– Professional and business services (includes staffing/recruiting): Down 198,000
– Healthcare and social assistance: Down 130,000
– Information (includes tech): Up 101,000
What does this mean? Talent demand has softened from unprecedented highs but remains robust in many sectors. Hiring challenges won’t vanish but may moderate if this downward trend in openings continues.
Quit Rates Plunge But Still Exceed Pre-Pandemic
Also per BLS data, the quit rate dropped to 2.7% in July, down from 2.8% in June and a peak of 3% in November 2021. July saw 253,000 fewer quits.
Again, context is key. July 2022’s quit rate of 2.7% still exceeds the pre-pandemic level of 2.3% in July 2019. Turnover remains elevated versus historical norms.
With quits declining but still high, retention challenges won’t disappear. Employees still have leverage, just marginally less than last year’s “Great Resignation” heights.
Hiring Will Remain Competitive But With Some Relief
Translating the data into projections, we can expect hiring to remain highly competitive into 2023. However, trends indicate some easing of conditions versus 2021/early 2022.
For small/mid-size businesses, this means:
– Talent supply/demand imbalance persists but is less extreme. Hiring still takes time but viable candidates exist.
– Wage pressures and turnover risks remain elevated. Don’t abandon employee engagement efforts.
– Avoid complacency. Job seekers have options. Deliver an appealing candidate experience from job posts to offer stage.
– Be strategic with pay. Research market wages but balance with internal parity and budgets. Don’t overextend.
– Consider retention incentives like growth opportunities and flexibility, in addition to compensation.
The takeaway? Hiring will still be tough but smart employers have an opportunity to reset and refine their talent strategies for 2023 without the chaos of 2021’s red-hot market.
Tactical Tips to Navigate the Job Market for Rest of 2023
Assessing labor market stats is helpful for context. But what tangible actions can hiring managers take right now? Here are 5 tactical tips:
1. Set realistic hiring timeframes. While demand has cooled slightly, top talent is still scooped up quickly. Have patience but act promptly when you find viable candidates.
2. Broaden your outreach and pipelines. Don’t just post and pray. Tap networks and get creative with sourcing. Seek out passive candidates.
3. Sell your culture. Highlight differentiators like flexibility, remote options, and career growth. Set yourself apart.
4. Automate and update recruiting workflows. Remove bottlenecks. Refine job posts and candidate communications.
5. Proactively engage existing team members. Check in often. Recognize contributions. Listen to concerns. Aim to retain.
With strategic hiring practices aligned to current trends, small and mid-size businesses can still build strong teams despite a competitive job market.
Stay tuned to this blog as we continue providing insights and best practices for recruiting and retention during these dynamic times. What are you seeing in your local labor market? We welcome your perspectives in the comments!