America’s economy is at a strange tipping point where unemployment is low at 3.6%, help wanted ads abound, and talented candidates call the shots. Yet, simultaneously, rising interest rates, business costs, record inflation, and sinking consumer confidence are signaling the potential for a hiring slowdown. So how should businesses approach near-term hiring decisions with an eye to a sudden downturn in the economy?
Hiring managers, take note: hire the best candidates you can find now for long-term value, and only those who have the talent, drive, and ability to support your success should an economic contraction occur. Read on to learn why and how.
Politicians are riding high on a terrific jobs reports, pandemic recovery, and improved supply chains in many sectors. There is a lot to celebrate. We’ve come through terrible times, and business owners and employees have shown flexibility and resilience. But is it time now to shift focus and reevaluate our labor needs for the future? It would seem so. Every day, political and financial leaders warn about the overstimulated economy and a possible shift toward recession. It seems it is no longer an “if” but a “when.” Here are some signs:
Economic growth may have peaked. According to the Bureau of Economic Analysis, the U.S. economy shrank 1.5% in the first quarter of 2022. Second-quarter’s GDP will say if this is only a blip.
Layoffs are up. As we know, 8.3% inflation is at a 40-year high, signaling the Fed to raise interest rates. Unfortunately, raising interest rates tends to stifle investment and kick off cost-cutting, resulting in hiring freezes or layoffs.
The tech industry is already leading the way. Worker layoffs in May reached 15,000, signaling weakness in the tech sector. In addition, Meta and Twitter have reportedly frozen hiring, and layoffs are increasing in other sectors, as Carvana, Netflix, and Pelaton released hundreds of employees.
More part-timers. The BLS jobs report indicated that “The number of persons employed part-time for economic reasons increased by 295,000 to 4.3 million in May, reflecting an increase in the number of persons whose hours were cut due to slack work or business conditions” (U.S. Bureau of Labor Statistics).
Higher prices, less spending. Consumer discretionary spending is slowing even as consumer price indexes are climbing. Higher wages offset some of the increased costs, but more is being spent on necessities like food, gas, and housing. As consumers pull back, companies must reduce costs and increase efficiencies on less revenue. For example, without the remote shopping frenzy experienced during the pandemic, Amazon recently reported that it was overstaffed and will begin the process of notifying employees about layoffs.
If the U.S. economy begins to tip toward retraction, as many experts say it will, what hiring strategies can tip the scale in your favor?
Two smart hiring strategies heading into a recession
- Hire the best people you can find. Another 4.5 million quit their jobs in March, making finding transitioning talent even more complex and time-consuming. You need to know a) if an applicant’s skills and abilities match up to claims and b) if the personality and track record of the candidate match the stamina and resilience needed in challenging times.
Don’t waste time and money if you wish to be more selective and deliberate in your hiring. Instead, let Partnership Employment’s expert recruiters help you source the right talent, skills, and industry experience to make a competitive difference in an economic downturn. We have decades of experience recruiting through multiple recessions and understand the best attributes necessary for success.
- Fill labor gaps with talented temporary staffing. While the job market is still red-hot in sectors like leisure and hospitality, retail and tech companies like Netflix, Amazon, and Walmart are scaling back. So you might need people now, but you want to avoid layoffs later.
Fortunately, Partnership Employment has decades of staffing experience in temporary employment. Whether you need talented and skilled workers in accounting, HR, IT, legal, or administration, our partners will supply custom solutions to fill your labor gaps temporarily. We also have the expertise to provide you with creative ideas to utilize staffing better to enhance productivity, reduce costs, and manage employment risk. Unemployment always lags other recessionary indicators, so just because your sector seems healthy and hiring is robust at the moment, the scale could tip swiftly. Don’t be caught unawares. Let the experts at Partnership Employment help you balance your labor needs in an uncertain economy.