The Impact of the Recession on the Job Market
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This week’s article is written by Evan Sohn, Chairman and Chief Executive Officer of Recruiter.com. It is a companion piece to his interview on Innovating Leadership, Co-creating Our Future titled Hiring for Keeps: The Rise of Recruiter.com which aired on August 9, 2022.
|Short clip from the interview:||Link to the entire interview:|
In 2019 the average cost to hire an employee was $4,129. In 2021 it was $4,425. Based on the BLS data the total cost to hire employees in 2019 was on average $24B per month. Given increased employee churn from the great resignation and the job hopper economy (which we are now calling “job mobility”), the May 2022 cost to hire was $4.6B more than the 2019 avg cost to hire. So far, the US Economy has spent over $25B more than in 2019 on hiring. We predicted in December 2021 that it would exceed $50B (over 2019 spend) and so far, we are tracking. (Note the avg cost to hire an executive is $14,936 so it is an even higher cost).
I saw this article about a survey from PwC and I could not believe it as it reported that despite a looming recession that 20% of their surveyed folks were planning to quit in 2022. Now keep in mind that the annual voluntary churn in the US was already around 20% but it ranges pre-pandemic from 12% in financial services to 80% in hospitality and retail. So 20% doesn’t really sound off any alarms to those who know the numbers but, it does show that job mobility might not be a deterrent with a recession.
We also keep hearing about “tech layoffs” almost on a daily basis. The Recruiter Index does show recruiting in the IT Sector to be as strong as May but flat in terms of Month over Month tracking.
It was our opinion that many of these layoffs were in fact a result of the over-hiring of employees that we reported on CNBC earlier in the year. The high-quality developers are still in demand and are fetching very high salaries.
We actually launched a new initiative to help companies build their OWN development teams outside of the US (mostly in LATAM). We are seeing a desire for US companies to invest in their own teams (as opposed to outsourced development organizations) but locate these folks (remote) in near-shore regions like LATAM. We are doing this without any placement fees. This is ideal for startups and high-growth companies seeking to hire awesome developer talent without the higher cost of today’s US software engineers or the markup of outsourced development companies.
So assuming there is a recession and it does not impact the job mobility of today’s employees what could you do about it? Here is a great article on the ways to retain your talent during these “interesting” times…and it is not just paying more money.
ABOUT THE AUTHOR:
Evan is the Chairman and Chief Executive Officer of Recruiter.com, an on-demand recruiting platform that combines AI and video job-matching technology with the world’s largest network of small and independent recruiters.
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