The pace of hiring may have slowed down a bit over the course of the last few months, and employment stabilized (it had to come sometime), but that doesn’t mean that filling the positions or retaining the best employers has gotten any easier for U.S. businesses. The tight labor market means it's time to get creative.
CCG: If fewer companies have jobs to fill, why is the work of hiring still difficult?
Miller: The answer is multi-faceted and includes such variables as location, industry, hiring managers’ ability to get the job done, and even culture. Putting all that aside, the biggest reason so many companies continue to turn to staffing companies for help is that there just are not enough people out looking for jobs. For almost two years now—22 months to be exact—unemployment is under 4%. As we can attest at Patrice & Associates, we continue to have a huge pool of job openings that keep our franchisees very busy. In fact, more than our franchise owners can handle. That’s why we are aggressively looking for new franchise owners who want to get into the recruiting business and work for themselves but not by themselves.
CCG: It’s been months, a year, or longer, and the recession everyone has been dreading has not arrived. Do you think it is still a matter of time?
Miller: To affirm your hunch with an anecdote, one of our franchisees said when talking about his business, “No recession here! We’re still doing what we do, which is help our clients find or, in today’s market, hire away, top candidates from companies with weaker cultures and fewer career advancement opportunities. That has not slowed down significantly.” Part of the reason is that companies still need great people. It’s a reshuffling of talent in an economy that is still growing. Instead of some people having no seats, we have empty seats when the music stops. As long as there’s growth, there’s a need for people to manage it. That’s been our experience. We hire managerial level and above. Our franchise owners and recruiters may have to make a few more phone calls to find the right candidates, but there’s no shortage of jobs to work as a Patrice & Associates franchise owner. Will we enter a recession? It’s impossible to know, but if we do, it won’t be because of the current fundamentals.
CCG: A soft landing then, and a return to lowering, rather than rising, interest rates?
Miller: I agree with what Andrew Hunter, deputy chief U.S. economist at Capital Economics, wrote in his report, “The muted rise in real consumption and further decline in core PCE (Personal Consumption Expenditures) inflation in October will reinforce the growing belief in markets that interest rate cuts are on the horizon.” Muted in this context means that prices may still be rising but at a slower rate, signaling inflation is cooling off. That’s the scenario we need for interest rate cuts. Let’s hope it lasts.
CCG: What other trends are your franchise owners and you seeing?
Miller: One of the biggest trends is that hiring companies are being more selective than they have been in recent years. Most industries, including Food & Beverage, have regained jobs lost during the pandemic. The hiring frenzy is past. Now, companies expect candidates to meet the skill requirements for the job. The candidates who have those skills get the jobs. It’s less about filling seats and doing the time-intensive work of teaching. The work is on the front end—finding qualified people, and that’s why our franchise owners are busy.
CCG: Let’s talk longer term. Going forward, is hiring and staffing going to get any easier?
Miller: My take is that companies will find it increasingly difficult to source and hire top talent on their own. Even with help from our franchise owners, the task isn’t going to get any easier, primarily because of the demographic makeup of the U.S. and the labor force participation rate. They add up to talent being the barrier to growth. Even Treasury Secretary Janet Yellen said that economists are eating their words predicting high U.S. employment. While we understand that the U.S. economy can always twist and turn, it looks like the tighter labor market is here to stay.
CCG: What are the numbers that support that observation?
Miller: One astounding statistic from the World Health Organization is that between 2015 and 2050, the proportion of the world’s population over 60 will nearly double from 12% to 22%. That means that nearly a quarter of the people in the world will be at retirement age. We have an aging world population. Another factor, as John Robertson of the Atlanta Fed pointed out, is that the working age has hardly changed over the years—you start working maybe at age 16 and retire at 65. When there are fewer people coming into the workforce and more people going out, you can’t help but have a worker deficit. Especially when innovation and business opportunities are so abundant and the demand for workers is increasing.
CCG: It seems like a good era to be in the staffing business—you’ve never been more needed—but it’s going to be rough for businesses in general. So what are companies to do?
Miller: Companies, starting today, in my opinion, need to reassess how they will fill their labor shortages and bridge the talent and skill divide. They will need to successfully encourage older workers to remain active and employed. That’s the short-term Band-Aid. Long-term, it will take more creative solutions. Here are a few: Companies will need to incentivize top talent to postpone retirement, a complete one-eighty from the early retirement incentives of past eras. They will need to offer part-time or more flexible schedules to retain talented staff. Patrice is working with clients continually on this more consultative approach to Human Resources management. I believe that part of our business and its role in the success equation will continue to grow.