After a considerable stretch of growth, the job market has begun to moderate in the early months of 2023. While the national labor market added approximately 339,000 jobs in May 2023, the growth rate is slowing from last year’s highs, as is wage growth. In Washington State, the economy added 6,100 jobs in April 2023, with the unemployment rate decreasing to 4.3 percent. At the same time, many companies are slashing jobs across the board to offset the last year’s rapid-growth hiring and slim down budgets to guard against more economic uncertainty. Today’s job market is still one of growth, but slightly more cautious growth, indicated by a slowdown but not a complete trend reversal. In some ways, these trends are a course correction from over-hiring. Many companies grew rapidly over the past few years, in response to pressures and demands of the COVID pandemic, and they’re now looking to shrink back to more of a “normal” size. There’s more to today’s job market than just hedging bets, though – here’s what to keep in mind.
Skills Gaps and Reskilling
A focus on skills, rather than titles, has been pushing the job market forward in recent months. Research from Gartner found that the number of skills required for a given job has been increasing at 6.3% annually. Additionally, 29% percent of the skills in an average job posting from 2018 were obsolete in 2022, and the rapid skills obsolescence is continuing today. As the work world changes rapidly, it can be challenging for companies and individuals alike to stay up-to-date on the most relevant and recent skills. Businesses need talent who are qualified to fill current roles right now. Ideally, those hires will be equally interested in upskilling and career development to move their teams into the future. Unsurprisingly, employees and organizations are putting a greater focus on upskilling their current teams, not just hiring externally for fast-changing skillsets. In fact, upskilling can have a triple benefit: satisfying employees’ desire for career development, satisfying employers’ needs for new skills, and saving money. Research shows that it can cost up to six times more to fill a role with an external hire than it costs to upskill internally, and external hires may have a turnover rate up to two or three times higher than internal promotions.
The Ongoing Preference for Hybrid Work
One of the biggest shifts over the last few years has been the evolution of remote and hybrid work. A few years ago, it was an occasional job perk and often limited to a handful of jobs types. Today it’s one of the most common and popular aspects of work across the board. According to Gallup, approximately 60% of remote-capable employees say they would prefer permanent hybrid arrangements. The popularity of hybrid work doesn’t seem likely to be waning anytime soon, as more employees reap the benefits of better work-life balance, less commuting, and more flexibility overall.
Companies looking to hire top talent will need to keep this preference for a hybrid work model in mind while also re-evaluating all aspects of the employee value proposition. Today’s employees, at every level and across industries, are looking for perks that support a well-rounded, balanced life. They’re more likely to accept job offers with a competitive salary, a strong benefits package, great healthcare, and flexible or hybrid scheduling options.
While the prospect of competing for top talent in this environment can seem daunting, it can be an excellent opportunity to make necessary changes and build for the future. Top talent at other companies may be facing budget cuts or layoffs, or they may just be more interested in exploring other options. In that atmosphere, it’s the perfect time for your organization to get ahead with a truly appealing value proposition so that you can build a flexible, talented team ready to face the future and succeed in any circumstances.
“Employment Situation Summary.” Bureau of Labor Statistics, 2 June 2023, https://www.bls.gov/news.release/empsit.nr0.htm.
“Monthly employment report.” Employment Security Department, Washington State, https://esd.wa.gov/labormarketinfo/monthly-employment-report.
“Top 5 Priorities for HR Leaders in 2022.” Gartner, 13 December 2021, https://www.gartner.com/en/documents/4009421.
Bersin, Josh. “Build Vs. Buy: The Days Of Hiring Scarce Technical Skills Are Over.” Josh Bersin Company, 16 August 2022, https://joshbersin.com/2019/10/build-vs-buy-the-days-of-hiring-scarce-technical-skills-are-over/.