The Landscape: Today’s Job Market
Is this the best job market ever? And what does that mean for hiring?
This question has been circling around North America for a bit now. The Wall Street Journal just referred to this period as “the hottest job market in a half-century,” which was primarily a reference to the U.S. job market. The U.S. job market has added jobs for 100 consecutive months, and is broadly seen as “hot,” although there’s some nuance to that which we’ll discuss in a second.
The Canadian job market is also seen as surging, largely based on a massive uptick in private-sector hiring, although again, there’s some nuance to all the good news. Let us begin there.
The nuance of the U.S. job market
While there is clearly growth, the results of that growth go the top levels and not the labor levels. In other words, if you own a company or founded one, chances are you are getting increasingly rich. If you simply work for one, the chances are substantially less. In general, workers’ salaries/wages are being held down, a process sometimes referred to as “economic stagnation.” Then there’s the issue of housing (and more generally, the rising price of goods and services): there are amazing, well-paying jobs in a tech hub like San Francisco, for example, but median 1BR rent in San Francisco is now $3,700/month. That essentially means $48,000 of your salary would go just towards rent. See where the problem point is? Companies want to keep salaries down, but housing continues to be expensive. So the job market is hot, but it doesn’t benefit everyone.
Very similar to U.S. in many ways. Unaffordable housing hurts the Canadian job market, and much like the U.S., placing in rural areas is a challenge as well. Canadians and U.S. residents both have a pessimistic view of the job market, housing costs, and their personal financial situation, despite overall positive numbers at a macro-level. A rising tide may not be lifting all boats.
What does this mean for hiring?
It means a lot. The conventional idea of a “hot labor market” means that candidates have more power and employers have less power. That’s not entirely true, especially for the unemployed (who need a job faster) or the less-educated (who employers tend not to respect as much). But yes, at a baseline, it’s a more candidate-friendly time when job markets are hot.
That means your hiring process needs to stand out. We often call this “candidate experience.” Remember to:
- Communicate well with candidates
- Let them know where they stand
- Articulate the different value propositions of working with you
- Don’t make them jump through lots of extra hoops (unnecessary interviews, etc.)
Your employer brand needs to stand out in a hot labor market. There’s no other way to say that.
Consider this recent headline from ERE: Why can you continuously track an Amazon package, but not your application? Candidates do legitimately wonder that. They know exactly where their dog food is, but not where they stand with a potential employer. We have tons of recruiting technology these days. Why can’t we get this right?
As a company, it’s best to start small. If one of your main issues is time — i.e. your recruiters and HR department doesn’t have it — then start by using chatbots for candidate communication, or use a smarter automation processes overall. Let tech be a friend, not a foe.
What about salary?
This is a tricky issue. Obviously, many companies want to keep costs down, as this helps growth reflect better. Paying people a lot in each needed role does not help keep costs down. And, to be blunt, not everyone can (or should) be a VP or founder. Not everyone can make the top salaries. But you need to pay people fairly and give them opportunities for growth, especially in a tight job market. If unemployment, especially tech unemployment, is low … that means losing someone creates a hard search to find their replacement — and money will come up again.
Think of it like this: you lose a software engineer in Toronto. The tech unemployment rate there is low. To find a new engineer, you need to approach people who likely already have jobs. Almost no one leaves a job for less/the same amount of money, so they expect at least a slight raise (and perhaps a large one). Every time there’s turnover in a tight job market, then, the replacement is likely to cost even more than the person you lost. You can reduce turnover by offering fair market compensation in the first place.
Technology can help with this. Ideal doesn’t do this per se, but AI in general can crunch massive amounts of data. If you work with a job board partner, ask them for local market data on salary by role. Look on LinkedIn, where it can also be found. Understand what your market and your broader competitors are paying, and try to be fair within that.
Hiring better is the key to tight job markets
Why? Because you need the best people, and ideally the best “fits,” who won’t turn over and leave you scrambling in a candidate-friendly ecosystem. You get better hiring by leveraging your culture and uniqueness with your tech stack options. That’s what 2019 hiring is all about.