This week the US Labor Department reported that total non-farm employment increased by 164,000 in April. This is slightly lower than the projection of 191,000. However, there was a net upward revision for February and March, increasing employment by 30,000. This continuing increase has resulted in an unemployment rate of 3.9%, down from 4.1% where it had been since October 2017. To understand the significance of this result one must go back to the late 1960's to find a similar unemployment rate.
The increased employment came from professional and business services, manufacturing, healthcare, and mining. There was little change in other sectors.
Long-term unemployment has been reduced by 340,000 people, is holding at 1.3 million persons, representing 20% of the total unemployed.
The labor force participation rate is 62.8%, and the employment to population rate is 60.3% largely unchanged. Involuntary part-time worker's employment is unchanged at 5 million people.
1.4 million people are marginally attached to the workforce, down by 172,000 people. These people want to work and have looked for work during the past 12 months, but are not counted as unemployed as they had not been actively looking during the past four weeks.
The average workweek was unchanged at 34.5 hours.
There's still a lot of slack in the economy keeping a lid on wage pressure. The reasons include a large number of folks still unemployed; and slow gains in productivity improvement. The labor force participation rate was greater when the "dot-com" bubble burst in 2000. Also, the long-term unemployed have been slow to return work, also suppressing inflation. Together, these statistics are inhibiting wage increases
So, what does this mean for employers?
As the labor market tightens, fewer people are in transition, looking for new jobs. Those in job search find it easier to land, spending less time between jobs. It may not be as big an issue hiring down the line where the labor pool is greater. However, this tightening will have an effect on senior-level positions where the labor pool is smaller and more competitive. This requires employers to shorten their recruiting and selection cycle and offer a more competitive compensation package. If the career opportunity is not compelling, those employers will be disadvantaged.
One of the difficulties facing hiring managers is their understanding of the labor market. If one hasn't had recent experience conducting a search for a specific position they may not be sensitive to the current dynamic. Whereas they may understand the situation on an intellectual basis, they have not internalized that information. As a result, their sense of urgency may not be what it should be. In the last few months, I have lost excellent candidates to other opportunities, as my client was moving too slowly.
So, how should hiring managers respond? A good place to start is with your Executive Recruiter. Ensure that you and your recruiter are on the same page with respect to desired background and credentials. A job description is a good place to start. Make sure that all internal constituents are on the same page, especially with respect to key strategic initiatives expected of the position. Use interview guides to facilitate the process, providing a consistent frame of reference to evaluate the candidates.
Make use of technology. Use the telephone interview wherever possible, including multiple people as required by the internal selection process.
Don't wait until all constituents are physically available to bring candidates in for face to face meetings. Use video conferencing wherever possible. Go with those available and schedule time with the others as necessary. I find that the coordination of schedules to facilitate interviews is the single largest time waster in the recruiting and selection process.
Have the offer letter/compensation package prepared in advance. This document(s) can be prepared in parallel to the selection process, easily modified to the specific needs of the candidate. If one waits until the end of the process, time will be wasted, especially if the new hire will receive an employment contract.
If you want to be effective recruiting top talent in a tightening labor market, find ways to shorten the process and commit to a faster response time.
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Jim Weber, Managing Partner
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