Note: This “think piece” is designed to stimulate your thinking about the 2021 job market.
If you’re considering a job search, you may be shocked to learn that the 2021 job market may be worse than our current dismal one. Of course, I realize that few want to hear negative job market forecasts, in part, because so many in HR and the career field are eternal optimists. I would suggest that a wake-up call is in order. In my view, if you are a job seeker or a recruiter, it is time to begin preparing for an even bleaker job market in 2021. Many more applicants will be active in the job market, and the start of economic growth will likely be delayed. To stimulate your thinking, below, you will find several snapshot reasons covering a few problem areas that could make this “even bleaker job search scenario” a reality.
Reasons Why Many More Candidates Will Be Actively Looking For A Job
As a job seeker, be aware that the competition is about to get stronger. You should anticipate some significant increases in the number of people actively applying for an even smaller number of open jobs. Some of the factors that could increase the labor supply and the competition between applicants include:
- Government benefits will eventually run out – after up to a year of scraping by on unemployment benefits. Some will tire of struggling with the reduced income. Others, who initially, at least somewhat enjoyed the many months off, may now want to return to their careers. The eventual ending of restrictions on housing evictions and the moratorium on repaying student loans will eventually force others to reenter the job market.
- Layoffs will continue – as government payroll protection (PPP) support that has been keeping some employees on the payroll runs out. The continuing weak economy will force medium and small businesses to continue with significant layoffs. Unfortunately, when the lockdown and the medical crisis finally begin to wane, anticipate more reductions in formally hot hiring areas like shipping, delivery, and financially stretched healthcare.
- Schools will eventually reopen and free-up parents – as schools at all levels finally reopen for in-person learning. This will free up many parents who have been forced to “home sit” their kids. They can now resume their old jobs (eliminating temporary positions) or reenter the permanent job market (swelling the ranks of applicants).
- Employee turnover will continue – in most cases, a tight job market reduces turnover. However, the last year’s stress may force many employees to wish to still move out of their current situation. In part, because it has so many bad memories associated with it (including how poorly management handled the pandemic/economic crisis). Others tired of zoom meetings and working at home may quit and move on to firms that have more quickly moved back to traditional in-person work sites. Also, many formal corporate learning programs have degraded over the last year. Employees who want to grow and learn may seek new firms that have already begun to offer more traditional learning and growth opportunities.
- Part-timers will eventually need full-time permanent jobs – a down economy has forced many to settle for part-time work. But when those forced into part-time work run out of their savings and/or tire with food and housing insecurity, they will flood the permanent job market as soon as they start seeing new permanent job openings.
- College students will push to graduate – online learning and a lack of engaging on-campus activities will have soured most students on the joys of the college experience. Pushing many students to graduate as soon as possible and also not to continue to grad school.
Reasons Why A Larger Number Of Applicants Will Likely Find Fewer Job Openings
It’s a mistake to assume that hiring will return to normal levels even if the economy turns around by midyear. Some of the factors that may contribute to the delay in businesses of all sizes posting new job openings include:
- The distribution plan for the vaccine will delay job growth across the board. Even optimistic projections suggested that it will be at least midyear before vaccine distribution to all citizens allows for significant business growth in the US. And because other countries will have even longer vaccine delays, restarting global business growth will take much longer. Without a spurt of growth and revenue, all new hiring will either be delayed or limited to only a handful of targeted positions until at least the fall quarter.
- Continuing political turmoil may delay solutions. The uncertainty that accompanies any new administration will likely delay business investment. And the razor-close margins between the political parties in Congress will also likely lead to a significant delay in the passing of any meaningful economic or pandemic solutions. Together these two factors will likely slow the start of any significant economic recovery until the end of the year. And because the Biden administration is openly pro-union, his policies, initially, are likely to focus on strengthening unions, unionized worker benefits, and job security. The resulting increase in the number of higher-paid union workers may slightly reduce job openings.
- After a recession, some jobs never come back. One study from the University of Chicago found that 4 in 10 jobs may never return in a typical recession. I would suggest that because so many small businesses were crushed in this recession, the percentage of jobs that never returned will be higher.
- In a few industries, job growth will lag the entire year. Even under the best-case scenario, a few industries have no chance of any significant job recovery within the next year. Those slow to return industries might include tourism, hospitality, airlines/aviation, cruise ships, movie theaters, and automotive. Some industries growing rapidly during the last eight months, like product delivery and video gaming, may even expect a reduction in total jobs.
- Executives will push for productivity increases before much new hiring. Due to the high uncertainty level, corporate executives are likely to avoid the hard to undo expense of new employee hiring. Instead, first emphasize short-term productivity-increasing methods like overtime, performance bonuses, additional training, and technology solutions before engaging in large-scale hiring.
- The recruiting process will slow… even when a company’s headcount budget is restored. Because recruiting budgets have been severely cut, it will take a while for recruiting functions to regroup and get back up to speed. Unfortunately, this will mean that it will take at least 25% longer to post and fill open jobs through the end of next year. Also, the imbalance between the job openings and a large number of applicants will mean that those looking for a job are unfortunately not likely to encounter a great deal of “white glove treatment.”
- Mutations in the virus may expand restrictions. Covid viruses can mutate so if any mutations were to happen in the wrong direction (so it is easier to transmit or has a higher death rate). Of course, these negative impacts will lead to longer duration “stay in place” restrictions, which would further impact and delay any projected corporate revenue and job growth.
Recruiters And Hiring Managers Will Have A Wealth Of Qualified Applicants
Many factors in 2021 will make the potential applicant unhappy because the competition for any open job will be extremely stiff throughout the year. On the other side, every company should realize that they can and should cherry-pick the very best with an abundance of qualified applicants. However, recruiters and hiring managers should also realize that the “power in the recruiting relationship has finally shifted” back to the company (after at least three years where the applicant held the power). Be careful not to damage your long-term employment brand by acting arrogantly during the hiring process.
One of my guiding principles is that “It’s better to be prepared than surprised.” Even though it’s impossible to perfectly project business growth rates, the pandemic’s continuing impact, and the imbalance in the job market, it does make sense to have multiple contingency plans covering at least the three most likely scenarios. From the job applicant standpoint, the ratio of applicants to open jobs will be worse than it was in 2020. This is great news if you are a hiring manager, but bad news if you are one of those that desperately need a permanent full-time job soon.
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© Dr. John Sullivan 12/21/20 for the DJS Aggressive Recruiting newsletter