Has the War for Talent ended in the US?31 Jul, 20234mins
For quite some time now, there has been a war for talent in the labour market, giving workers the upper hand when selecting which job to accept. Firms have been clambering to attract top professionals, trying to find innovative new benefits to woo prospective employees in a bid to get them to fill large numbers of vacancies, predominantly caused by the pandemic.
However, recent reports suggest that the scales are tipping back towards an employer’s market in the US with the labour leverage ratio, which measures the number of quits to layoffs, retracting by approximately 66% of the increase seen during the previous two years. This is a significant figure as the ratio is generally high at times when employees can easily change jobs for better ones and low when unemployment rises, and businesses can replace staff more easily.
What has caused the balance to change?
With rising interest rates and increased overheads, company budgets are tighter than they have been for some time, and this is beginning to be reflected in recruitment policies. As firms slow their hiring of new staff and even look at laying people off, workers are starting to prioritise job security in a bid to bring home a regular paycheck as personal finances continue to take a hit from the cost-of-living crisis. This change may bring about the end of the great resignation, reducing the need for companies to urgently fill large numbers of vacancies created by staff quitting their jobs at short notice.
The labour market is also seeing other changes in favour of employers too. As new roles become less readily available, business leaders realise that they may not have to offer overinflated wages to attract employees to join their company, and they can also be more demanding about how much time employees spend in the office. Market analysis backs this up, reporting that wage increases have slowed in the US over the past few months, and flexibility over hybrid working has reduced, with some companies, including Disney and BlackRock, calling for staff to be in the office four days a week.
Not all bad news for employees
While none of this seems like great news for workers, especially for job seekers, the real picture may not be as grim as it appears.
In Congress recently, Federal Reserve Chairman, Jerome Powell, expressed his hope that “a drop in job openings and an increase in the supply of workers could help bring the labour market back into better balance, rather than creating a significant increase in unemployment”. Something which should be good news for both employers and employees, with the Fed having frequently expressed their previous concerns over the job market being so far in favour of workers that it runs the risk of negatively impacting labour costs and inflation.
Additionally, average wages are beginning to outstrip inflation in the US, and although the leverage ratio is substantially reduced, it is still much higher across all industries than historical standards.
So, this change in the balance of power is, in fact, a return to more normal market conditions compared to the unusually high amount of leverage which candidates have enjoyed post-pandemic. It might take a bit of getting used to, but hopefully, it will result in a more stable economy in the long term, which should benefit workers and businesses alike.
If you are looking for a new role or need top talent to join your team, speak to our specialist US recruitment experts, and find out how McGregor Boyall can help you.