The March Jobs Report was released on Friday 4/2, and the recovery appears to be rapidly accelerating. Employers added 916,000 jobs, exceeding analyst expectations by over 50%, signaling that the labor market is well-positioned for robust summer growth:
·Overall unemployment fell to
6.0%from
6.2% in at the end of February
·The rate for college-degreed workers aged 25+ dropped to
3.7%from
3.8%in February
·
916,000jobs were added in March, and the growth was spread across a broad range of sectors
·Revisions to January and February figures showed that
468,000jobs were added during those two months, resulting in a net positive adjustment of
156,000compared with the figures that were originally reported
The recovery was widespread – almost every key labor market indicator showed a positive trend during the month of March. Almost every sector and industry added jobs, which is a welcome relief from the “K” shaped recovery experienced towards the end of 2020. Economists are more optimistic than they have been in months, and there is broad sentiment that a successful vaccination campaign could propel the economy into the fastest period of growth since the 1980’s.
One challenge that is emerging: companies are now struggling to hire. Despite the unemployment rate sitting at 6% nationally (and around 5% in Ohio), small businesses and large corporations alike are facing difficulties filling open positions. In fact, small business recently reported a high watermark for hiring difficulty (see chart below).
Typically, hiring difficulty tracks closely with the unemployment rate, but there are several unique factors at play that make this labor market unlike any we’ve experienced in recent memory. The first has to do with a nuance in the way that “unemployment” is defined. To be considered unemployed, potential workers must be actively seeking employment. However, due to COVID-related concerns (school closures requiring parents to stay at home, fear of health consequences, etc.), many more potential workers are
only considering remote opportunities – and many of the unfilled positions require on-site work, leading to a mismatch in the labor market. Another factor has to do with the extension of generous unemployment benefits. Logic suggests that these benefits may dissuade workers from returning to work quickly, although economists have been quick to point out that the data doesn’t necessarily support this hypothesis.
Regardless of the underlying causes, hiring managers are finding it increasing difficult to fill those open positions. However, it’s important not to relax your hiring standards to accommodate the tight labor market. Your people are the lifeblood of your organization, and it’s more critical than ever to maintain a positive corporate culture. Robert Half recently released the results of a study we conducted highlighting the significant costs associated with a “bad hire.” The key takeaway is that a “bad hire” wastes time, drains staff morale and productivity, and puts increased stress on your supervisors. You can find a link to the survey results here:
The Higher Cost of a Bad Hire. If you’re struggling to find talent, we’d love to be an additional resource to help you navigate this unprecedented job market and make sure you find the right fit for your organization.
As always, please let me know if there’s anything we can do to assist from a personnel standpoint – whether it’s direct hire, temp-to-hire, contractor or consultant, I’d be more than happy to help.
Hunter Lent, CPA
Client Service Director
Phone: (419) 297-5841
Click here to book a meeting with Hunter Lent