| The biggest question on everyone’s mind is the state of the market. Is it getting better? Is it getting worse? The answers from our desk here at Right Recruiting are below.
It’s getting better. This is the fourth recession I have experienced in my career as a recruiter (1980, 1982, 1991, 2001) and this was the shallowest recession. This is best evidenced by the unemployment rate. In 1982 it was 10%, in 1991 it was 8.2% and in 2001 it never got above 6.4%. However, what made this recession so profound was not it’s depth but it’s length. Instead of a quarter or two, it lingered for 2 or 3 years, depending on the industry in which you’ve worked.
The stats to look at to gauge the strength of the technology employment market are not the general monthly labor unemployment rate. That’s too broad to be useful for us. The key statistics in our world are capital spending (engineering, IT) and venture capital investment (IT, pharma, electronics). Those correlate most directly with the market for engineer’s and scientist’s skills. Both stats have been on an upswing over the last two quarters. We are finally seeing that increase reflected in the number of jobs available, both in-house here at Right Recruiting and in ads- online and classified. If you are looking for a job, there are more places to send your resume than at any time in the last 3 years.
Okay, if things are better why are some of the people who are getting this e-mail still out of work, some for months or years? Well, I think it’s because we are at a funny stage in the recovery cycle. While there are definitely more companies in the market, every one of them thinks they are the only company hiring and that everyone else is still laying off. That breeds complacency in their approach to the market. That lack of intensity creates a long resume review process, interview process, decision process and tight specs. After all, if a company feels it has no competition in hiring, why hurry the process? I see that attitude with my clients and other people have shared the same observation. Right now there is little that can be done to hurry the process.
The good news is that as the market improves, the complacency problem solves itself. We are getting close to that point now. In February, we filled two jobs with people who were out of work for over a year and I know of one other person out for 8 months who had just received 3 offers. Of course, he turned two down. I have no doubt those turndowns shocked both those companies. While this is empirical evidence, people I’ve been talking to over the last month support these observations. Companies are finally beginning to pull the trigger on their openings and make offers. That will begin what the economist’s call a "virtuous cycle" of positively reinforced behavior.
Over the next few months and quarters, those companies who have delayed decisions on hiring will finally begin to call people in to interview or begin to extend offers. They will evaluate the 10 resumes they’ve had for the last 2 months and try and schedule 5 people for interviews. Of the 5, 1 person will be off the market. Of the 4 people they interview, they will like 2. A few weeks later they will extend an offer to their top candidate. Surprise. He took a job last week. No problem. They move to the Number 2. Surprise, he has 2 other offers and will let them know in 2 weeks whether he accepts or not. That cycle is beginning now at companies around the area. It can’t be rushed. Once that process has worked out we are back to a normal market.
Or maybe a better than normal market. Over the last year or so, the problem has not been layoffs. Most of the layoffs ended early 2003. Keep in mind we still have a reasonably low unemployment rate at below 6%. The employment market has been stagnant because we’ve had no job creation for 2+ years. As counter-intuitive as it may sound, there aren’t a whole lot of people out of work. There just hasn’t been a lot of hiring. That’s resulted in those who are out of work being out for an unusually long period of time. Any up tick in hiring should result in a rapid tightening of the market. Since the available labor pool is broad but not deep, I am hopeful that the intensity of the market will pick up sooner rather than later. Good news for all.
Of course, different industries and disciplines will recover at different rates. For the first time in years, first quarter 2004 has shown some life in the electronics world. I think we are through the telecomm bust and are on the cusp of a revival in hiring for hardware and software engineers. IT, while it is recovering, will not get back to the late 90’s quickly. Anyone who thinks outsourcing of code is a fad is badly mistaken. A consistent career in IT will be hard to maintain. If your skill set includes the latest code, you’ll be OK for a while. Once that technology becomes commoditized, there will be pressure to send your work overseas. Pharma and biotech, which not as cyclical, have their own ups and downs. Last year ended up slow for that market, with a few major employers establishing hiring freezes and Venture Capital money slowing up for smaller firms. This year has seen some of that money start to flow again so we should be looking at a more stable market in those industries.
If you are still looking for work, I believe a better market is soon to appear so don’t despair. If you’ve been out of work and took a bad job for "paycheck maintenance" reasons, maybe it’s time to consider upgrading. If you’ve wanted to change jobs but have held back because of a poor market, it might be time to get back in the water.
As ever, Right Recruiting is here to help. Our next newsletter will address a question that comes up constantly whenever the economy turns south - "How do I get into the medical device and pharmaceutical industry?"
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