Even a mild recession won’t help with talent shortages

Bradley Savoy February 7, 2008

As an HR practicioner and consultant, I’m keenly aware of what started to happen in Q4 of 2007 and the trends we’re seeing for 2008. The big questions seem to be: Are we in a recession or not? If we are, then its only going to help me find talent, right?

The answer is yes, and no. To a majority of the US population we’re already in a recession. From an enterprise business perspective we’ve seen pockets of recession across different industries. This hasn’t effected the talent shortage though.

If you look at historical recession stats, you find that the majority of companies that reduce their workforce during a recession are also hiring - but for strategic or hard to find positions. You also find a labor surplus in some industries or markets while catastrophic labor deficits exist in many others such as Health Care, Biotech, etc.

It’s also important to remember that as unemployment data hits the market, it doesn’t represent the “educated” workforce (Bachelor’s degree and above) but overall unemployment. So BLS reports overall unemployment is at 4.7%, but “educated” workforce unemployment is less than 3%.

While most HR/staffing professionals may hope a mild recession will help with labor shortages, they need to realize that the labor deficit is a demographic structural problem, not an economic cyclical problem.

For example:
- 92 million Baby Boomers reach retirement age by 2010, many of which are retiring at an earlier age than previous generations.
- A baby boomer reaches age 55 every 8 seconds!
- In the 70’s, people changed jobs 3 times during their career. In the 90’s that number increased to 7 times; 2000 every 3.6 years (11 times in their career).

The bottom line is that there are fewer “educated” people changing jobs at an increasing rate. Even in a recessionary market, companies should always be looking for the best talent, not the best talent that’s available.

Posted in Human Resources Analytics, Human Resources, Recruiting