Once again, the December labor numbers signal that it is still a tough road for employers seeking quality talent. Now, there are even more jobs to fill. A whopping 216,000 more, which exceeded the expectation of about 170,000. It’s also a big jump from the 173,000 jobs reported last month.
CCG: What does this unexpected acceleration in open jobs mean?
Miller: Well, it could mean that, generally, businesses are becoming more optimistic that interest rates will stabilize or start going lower and are staffing up. But it can also mean the interest rate hikes are not working as planned. This higher jobs number could mean more interest rate adjustments upward. For employers, the bottom line is it will be tough to find qualified managers on their own. The best candidates are already employed, and that’s why at Patrice & Associates, we’re busier than ever making the calls to recruit the currently employed talent that our clients can’t.
CCG: Hospitality is a unique specialty for Patrice & Associates. What’s the road ahead?
Miller: This sector continues to grow, logging about 40,000 jobs in December. Only the Government created more jobs, 52,000 to be exact. Health care added 38,000 jobs. There’s more to be learned when you look at Leisure and Hospitality job gains monthly through 2023. The sector added an average of 39,000 jobs per month in 2023, so this pace has been going on for a year. Of course, 2022 was the outlier, with about 88,000 jobs per month as the industry recovered the jobs lost during the pandemic.
CCG: Has the industry fully recovered?
Miller: Not quite yet. Employment in the industry is still below its pre-pandemic February 2020 level by 1% or 163,000 jobs. However, thanks to the tight labor market, demand for Hospitality talent remains strong. I know our recruiters are beyond busy with this sector alone.
CCG: It seems like expecting resumes to come in the door from job boards is no longer realistic.
Miller: It is a pipe dream. By my estimation, employers and even recruiters who work for other firms that rely on job board postings will struggle even more in 2024 than they did in 2023. They’ll find fickle candidates and have more dissatisfied clients because their hires will be lower quality and more transient. None of that is good for a business's top or bottom line.
CCG: Some companies may believe they are making an economical business decision by hiring on their own, but that’s not necessarily the case, is it?
Miller: Inexperienced hiring managers may think saving money on a placement fee is a good idea. But the real losses begin to kick in when the employees they hire don’t work out and leave after six months. Few things are more expensive in terms of actual costs and opportunity costs than a poor hiring choice. You lose not only the salary you paid but also the time you invested in getting the employee ramped up to productivity. That’s saying nothing about the potential harm to a company’s culture and customer experience, which you know happens—a lot.
CCG: You’re right. Unfortunately, this scenario plays out all too often.
Miller: Having grown up and started my career when employers had the upper hand and plenty of choices for each available job, it is still surprising that some employers don’t realize it is a different world today. I’ve lived through both and those rare periods of relative equilibrium. Today, we have a lot of jobs and fewer and fewer qualified employees. There’s even a name for that: The Labor Force Participation Rate (LFPR). The St. Louis Fed just released their report for Q1 2024, and they concluded: “Long run demographic trends related to decreased fertility and population aging create downward pressure on the LFPR, preventing it from returning to its pe-pandemic levels.” That number dropped again this month to 62.5%, meaning just over half of all Americans are part of the labor pool. Everyone is starting to see the significance of this reality now.
CCG: How are the Patrice & Associates franchise owners, recruiters, and teams adjusting?
Miller: Well, we’re doing what we’ve been doing. Not because we’re reticent to change but because how we’ve always worked is—now more than ever—how you find the best candidates in any labor market. You have to do the legwork, making calls, working your network, talking to people, and making things happen. Recruiting firms that take an employer’s job posting and copy and paste it into a job board will find that things will only get more difficult.
CCG: So what’s it going to take to win in 2024?
Miller: In 2024 and beyond, actually, the winners will be those recruiters who do the “real recruiting” we just talked about. They are the people who spend their days having conversations with qualified candidates who are not looking for a job but who would be open to a better opportunity if one came their way. Sourcing those quality candidates is what our clients expect, and it’s what we train our recruiters to do every day.