Jobless Claims Remain at Historically Low Level
February 9, 2023 – First-time applications for unemployment benefits rose last week to 196,000, a slightly higher total than the 190,000 that economists were expecting — but still a historically low number. Despite widely publicized layoffs from tech giants, media companies and the financial sector in recent weeks, the U.S. labor market remains robust after eight rate hikes in 11 months meant to cool the economy.
The four-week moving average of weekly claims, which smooths out volatility, fell slightly to 189,250. Unemployment claims have remained near pre-pandemic lows in recent months despite a wave of corporate layoff announcements in industries such as technology, real estate, and finance. Businesses in service industries such as restaurants, hospitals, and nursing homes have continued to hire, driving a jobs boom that added 1.1 million jobs over the past three months.
The Federal Reserve sees the labor market as “out of balance” despite an economy slowing under the weight of several interest rate hikes from the central bank. Earlier this week, in a speech to the Economic Club of Washington, Fed Chairman Jerome Powell suggested that the labor market may be facing “structural” changes. Those include a reduced pool of workers due to excess retirements among Baby Boomers, health concerns over lingering COVID-19, demographic changes, a drop-off in immigration and slow population growth.
However, the U.S. jobs market remains strong with employers adding 517,000 jobs in January, snapping a streak of five consecutive months of slowing employment growth. The unemployment rate fell to a 53-year low of 3.4 percent. There were 11 million job openings in December, exceeding the 5.7 million unemployed workers looking for work that month by a ratio of nearly two to one.
According to the Wall Street Journal, other recent figures have painted a mixed U.S. economic picture as the Federal Reserve raises interest rates to battle inflation by slowing growth. Consumer spending began to stall late last year. Manufacturing output and home sales fell in December. Continuing claims, a proxy for the total number of ongoing unemployment-benefits payments, increased by 38,000 to 1.69 million in the week ended Jan. 28. Continuing claims lag by a week.
Search Expert Weighs In
Karen Alphonse is a search solution leader and executive coach with ExecSearches. She joined the firm to spearhead its search consulting practice. Most recently, she served as a strategic advisor, confidant, and career coach to thought leaders in financial services, legal, education, and mission-driven organizations. Ms. Alphonse identifies talent through social media, job postings, referrals, and targeted research. Her interactions with hundreds of candidates and executives have shaped her creative interview techniques and ability to conduct behavioral assessments, take expert references, and understand candidates’ strengths.
Ms. Alphonse recently sat down with Hunt Scanlon Media to discuss the economy, what she foresees for 2023, and other hiring trends. Following are excerpts from that discussion.
Karen, what are you anticipating for hiring in 2023?
From our perch, we anticipate several interrelated hiring trends in 2023. These include: re-visitation of remote-hybrid options based on functional role analysis, cautious optimism based on the uncertainty of the economy, and focus on hiring at intermediate levels to fulfill leadership roles. This would be a version of “promoting from within.” We are already noting that in many instances organizations are hiring at pre-executive levels and training/observing new hires on the job before “promoting” them into the roles that their credentials and experience would dictate. This requires a shift on the part of job seekers. They have to be prepared, more often than not, to accept a role a few tiers below their last position. They also have to be prepared to prove their mettle in a hands-on way. As a matter of course, salaries may not reflect preparation and experience in the short term. A corollary to this might be increased reliance on 1099 or contractual work to supplement the internal team. When economic outcomes seem uncertain, short-term hiring provides a useful option. We are also seeing a settlement around remote and hybrid work. Many organizations have adopted a hybrid model. Others have been less eager to embrace remote. Things seem to be settling somewhere in the middle. For certain roles, 100 percent remote works extremely well. For other roles, that require more interpersonal transactions, hybrid might work effectively. A few roles seem to benefit from almost constant on-site presence, but these are rare. Whatever the mix, organizations are having to pay attention to the specific functions of each role to determine the formula for remote participation.
Any other trends you would like to share?
Culture building and training has become a distinguishing factor for companies and organizations that want to be perceived as progressive. Having a friendly, welcoming work environment is no longer optional. Next generation hires demand a minimum of respect and personal growth opportunities from their employers. This has created real pressure to develop customized training and clear career pathways within organizations. This has also created the need to examine minute aspects of culture to determine where and how cultures may need to improve to embrace the broadest possible spectrum of talent. In general, because of conflicting economic data, many organizations are holding onto their cash/profits in a “wait and see” posture. They are not necessarily focused on expanding unless it is absolutely necessary. Leaders want to see how the economy progresses, before making huge investments in hiring new staff. Predictably, this may create longer work hours and intensity on the job, if the demand for products/services/expertise increases without a corresponding hiring increase. We believe that specific need-based hiring will take precedence over hiring that anticipates rapid growth.
“Culture building and training has become a distinguishing factor for companies and organizations that want to be perceived as progressive.”
Do you feel we are heading into a recession? Why yes or why no?
In our conversations with leaders, we detect a certain reticence about expansion at the moment. This indicates that they are feeling cautious about the economy and want to secure the sustainability of their organizations, operating at current staffing levels. This “wait-and-see” attitude has predictable implications for hiring and growth. Overall, there the sense of reserve about engaging in intense hiring, will probably put constraints on hiring – at least in the short term. Contract and 1099 options become attractive ways to bridge short-term needs. Training also provides bridges between current and future workforce capacity needs. Organizations may pour funding into developing rigorous in-house training program to prepare existing staff to meet anticipated needs. Similarly, tuition-reimbursement and other learning programs may receive more attention and sponsorship, as a way to prepare existing staff to meet future demands, without engaging in full-scale hiring efforts. On the other side of the coin, many career-focused intermediate and C-suite leaders seem to be taking a second look at their current roles to see how they might achieve professional growth, without seeking a new position elsewhere. The underlying premise here is that it might be better to work with “what you’ve got” than to seek greener pastures elsewhere. This approach indicates that certain professionals sense the market uncertainty and want to hedge their bets in favor of their current roles.
What potential impacts will the search sector feel?
The ambivalence about hiring may result in decreased hiring for full term and leadership roles over the short term. It will also probably mean renewed emphasis on entry and intermediate roles, with an eye to making sure that these hires have ultimate leadership ability. Recruiters who are sensitive to these dynamics may find themselves focusing on the potential of each hire – even at the entry level – to ensure that they present professionals with high growth potential, who seek and acquire additional training and are focused on long-term skill building, rather than short-term remuneration. On the flip side of this, organizations that provide career pathways, structured professional development, and real opportunities for growth will probably acquire top talent, because of the shifts in the market dynamic and the expectations of potential employees/team members.
Do you see continued consolidation within the sector? Why are M&A deals attractive now?
One way to expand, without necessarily conducting increased hiring, is to acquire an operating company with analogous mission and vision and a complementary staff. This reduces the need for supplemental hiring and may also provide opportunities to align like cultures productively. We can foresee in an uncertain market the M&A strategy as an effective way to expand with minimum new hiring.
Related: Hiring Top Talent in Unprecedented Times
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media