The Job Market ‘Recession’

To the surprise of some analysts, the number of job openings has dropped by more than one-third. 

What’s fallen 36% in the last 16 months? Not the value of bitcoin. Not the price of oil, either.

It’s the number of job openings across the United States.

According to the latest government figures, the country had 8.8 million openings in July. That’s 36% below the all-time record of more than 12 million in March 2022. The number of openings has fallen in six of the last seven months. If the broader economy declined like that, some would call it a recession.

Since the number of overall roles still remains historically high, few are willing to go that far. But it’s clear the trend is having a big influence on employers. As companies cut back on the number of people they hire, they’re also changing the packages they’re handing out. “It’s one hundred percent true that employers are regaining control of hiring again—across every industry across the board,” says Jacob Zabkowicz, vice president and general manager of Korn Ferry’s Recruitment Process Outsourcing business.

Companies are trying to rein in some of the costs they had to absorb over the last two years to attract talent. Rather than bring in new recruits—and consequently increase payroll—more and more firms are reassigning people from roles that are no longer needed. Overall wages are still growing far more slowly than they were a year ago. And in some instances, companies are testing whether they can pay new employees less. Salaries for posted jobs are 5% below what they were in 2022, according to recent data.

The declining number of openings also means organizations are less fearful that their existing workers will quit. Indeed, the percentage of people quitting their roles each month—which spiked to an all time high of 3.0% in April 2002—is now down to 2.3%, comparable to the rate of the late 2010s.

Experts say the decline in job openings has to do with the overall economic environment. The Federal Reserve has raised interest rates from near zero to more than 5% since March 2022, which in turn has made it more expensive for companies to borrow money to finance expansion plans. At the same time, US consumers have, after a major post-pandemic shopping spree, moderated their spending, much like consumers and businesses in other parts of the world, who have cut back their use of a variety of goods and services.

To be sure, 8.8 million is still a lot of job openings. In February 2020, before COVID-19 threw everything into chaos, there were about 7 million openings. Barring a steeper decline from here, it might be unrealistic for firms to trim salaries and benefits if they expect to lure top talent.

Still, the decline is returning some leverage to employers. “The market was artificially high. Will it be overcorrected? I don’t know, but it’s being corrected now,” says Doug Charles, president of Korn Ferry in the Americas.


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