The Year-End Jobs Update

Is the market really slowing down, and can the job gains of underrepresented groups be sustained in 2022?

How good has the job market been for Americans? Companies have added, on average, more than 18,000 new jobs each day in 2021, a pace at least twice as fast as that in any other year in US history.

But everyone wants to know what’s next, especially since the latest jobs report was murky at best. Nonfarm payrolls increased by just 210,000 for November, several hundred thousand jobs below what was expected. At the same time, the unemployment rate fell sharply, to 4.2% from 4.6%. These numbers were tabulated before most people had heard about the new Omicron variant of COVID-19.

Mixed results or not, most experts say the outlook still looks good, though it won’t be as strong as in 2021. “Hiring volumes have remained high, although settling down to a degree,” says Jeanne MacDonald, president of Korn Ferry’s Global Recruitment Process Outsourcing solutions. Particularly in technology and pharmaceuticals, she says, a slew of new product initiatives will keep demand for new recruits high in 2022.

Executive-recruiting professionals don’t expect companies to slow their quest to fill open executive and other leadership spots. “We’re still seeing the volume,” says Doug Charles, president of Korn Ferry’s Americas region. Indeed, companies seem to be prioritizing filling those roles over frontline openings, even though the pool for frontline recruits is considerably larger, and even though, in theory, those spots are easier to fill. “No one understands why at a restaurant there are only five waiters when there should be ten,” Charles says.

Experts have theories about the most recent overall slowdown. For one thing, they say, businesses traditionally slow their hiring as the year winds down. Indeed, from 2016 to 2019, the four years prior to the pandemic, the month of November saw the third-fewest average number of jobs added, behind only May and September. Some firms pull back late in the year and to prepare to “go fast” in January and February, MacDonald says.

Another theory: companies are taking a breather to be more strategic about their hiring, says Jacob Zabkowicz, Korn Ferry’s vice president and general manager of the firm’s Global RPO business. Companies were desperate to fill the many open roles after the worst of the pandemic lockdowns ended, but now they are having trouble finding people with the right skill sets for the remaining openings. What’s more, many firms have raised salaries considerably and are thinking about how the higher wages affect the company’s bottom line — and about how some new recruits may be making more money than the employees already doing the same jobs.

Diversity and inclusion experts hope that any potential slowdown will not dent the inroads made by Black and Latinx employees. The employment-to-population ratio for prime working-age Black Americans rose to 74.3% last month from 73.3% in October, according to the US Department of Labor. The same metric for Hispanic or Latinx Americans climbed to 76.7% from 75.4%.

Although workers from the two underrepresented groups lost more jobs, on a percentage basis, than White employees did during the pandemic, the gap in the groups’ employment rates has now narrowed. During the worst of the pandemic, there was a nearly 10 percentage point gap between the White jobs rate and that of the two groups. Now that gap is at 6% for Blacks and at less than 5% for Latinx workers. “If you have a talent shortage you will look everywhere,” says Andrés Tapia, Korn Ferry’s Diversity, Equity & Inclusion global strategist. Tapia hopes that now that firms have discovered they can find the workers they need from these underrepresented groups, they will continue to hire them even if the overall talent shortage ebbs.