Last month, several prominent tech companies announced significant layoffs, which resulted in big headlines and a scurry of confusion. Hadn't we just wrapped our brains around the massive talent shortage and record-setting job quits?
What is going on?
Well, it turns out, a lot. However, to keep this article brief, we'll summarize.
The economy heated up quickly and inflation soared:
- As we emerged from the pandemic, the economy took off like a rocket. People had money to spend (accumulation of savings from going nowhere + trillions in government stimulus—nine zeroes if you're wondering) and energy to burn. The economy heated up fast and companies were desperate to find enough workers to keep up with soaring demand.
- Large technology companies experienced significant growth during and after the pandemic and didn't want to risk slowing their momentum by not having enough workers, so they over hired.
- Unemployment hit record-lows, which meant the prospect of filling those postings was slim. As in 0.2 unemployed workers for every job posting slim. The labor market was such that if you wanted to work, you would, and you'd probably get paid pretty well for it. People made more money and bought more things, even as supply chains struggled to keep up with demand.
- Which sent inflation soaring. The price of everything—rent, used cars, groceries, gas, paper goods, haircuts, housing, and yes, eggs—went up. Way up.
- The Federal Reserve (The Fed), a body that sets economic policy in the US, had to find a way to reverse the course of inflation without crashing the economy. Their aggressive interest rate hikes are an attempt to achieve that goal by weakening a very tight labor market. That's because higher interest rates mean steeper borrowing costs for companies, which means less growth, less spending, and less hiring. As job opportunities shrink, The Fed expect competition for workers to ease and wage growth to slow, which means spending will slow, which means demand will slow, which means, hopefully, inflation will too.
- Only, the workers weren't there. Not enough of them, anyway. Which meant companies competed for scarce workers by offering more money, improved benefits, and flexibility.
- Companies, particularly the technology companies who over hired during the early days of economic recovery, are feeling the squeeze of higher interest rates and a slowing economy in different ways (e.g., fewer sales, less advertising, steeper borrowing, etc.) though their response is similar: trimming labor expenses by laying off workers they hired too many of, or just don't need.
So, while there is merit to the headlines citing layoffs in big tech, it doesn't tell the whole story, which is: there is still a lot of work to be done.
According to Aaron Clark, senior talent acquisitions manager at Actalent, "skilled professionals won't be out of work for long. Not unless they want to be."
Particularly for engineers, who's in-demand skills transfer into nearly every industry. As we've written about in previous Economy & Labor Market Reports, every company is a tech company right now, in need of workers who can help them keep pace with rapidly advancing technology.
Engineering and sciences job postings in the last quarter of 2022 were 42 percent higher than the same timeframe pre-pandemic (Q4 2019), and 77 percent higher than the same timeframe in 2017 (Q4 2017).
Recently, Robert Half released its annual State of U.S. Hiring Survey, which gauges the staffing plans of more than 2,000 hiring managers. The survey revealed that 72 percent of companies plan to partner with contingent workforce companies to complete critical work (up from 45 percent six months ago). Another 58 percent plan to hire in the first half of 2023 (up from 46 percent six months ago).
According to Aaron, Actalent, which provides engineering and sciences workforce solutions across the globe, is an "excellent option for both businesses that are cautious to hire but still have critical projects to complete, and also candidates who are curious about the options that exist in today's market, regardless of where they are in their career journey."
Unlike staffing companies, Actalent recruiters don't just place candidates in positions and move on. Once a candidate is recruited by Actalent, they become an Actalent consultant, employed by Actalent, and the Actalent recruiter becomes their career advisor, coaching them through a rewarding career that's personalised toward their skills, interests, and aspirations. "Actalent consultants never have to navigate their career alone," says Aaron, "and our clients never have to worry about where they're going to find enough skilled engineering and sciences talent."
Some Actalent consultants support the same client their entire career; others love the variety of working for different clients on different projects in several different industries. "Our consultants are some of the brightest minds in engineering and sciences and they work on projects that are changing the world,"; says Aaron. "Anyone looking for meaningful, continuous work with great people and impressive results should look at Actalent."
To learn more about how you can build your career at Actalent, visit our career site today.