Three months ago I was sourcing for a very difficult position and was lucky to find two candidates who fit my specifications. I performed the same search this week and found more than six candidates who fit my specifications, most of whom were asking for less money than their previous counterparts. I’m sure you have all noticed this phenomenon to some degree within the last couple months. Is this d?j? vu? Are we back in the early 1990s when candidates were plentiful? According to the Labor Department, the U.S. economy dropped nearly a quarter of a million jobs in April, its worst monthly performance in a decade (1990s again?) ? pushing the jobless rate up to 4.5%. The recent numbers haven’t been good, but before you embrace that hiring freeze or layoff those extra recruiters, there are some important economic factors to be considered:
- Past Federal Reserve Actions. The central bank has cut short-term interest rates five times this year for a total reduction of 2.5 percentage points in less than five months. According to many economists, the Fed has created almost unprecedented liquidity this year. Even though corporate fundamentals are poor and stock prices are still high, that liquidity has to go somewhere.
- Future Federal Reserve Actions. The Fed will meet again in June and August. Many predict they will continue to drop rates by almost another half of a percentage point.
- Rapidly Moving Financial Markets. Unlike the early 1990s, it will not take one to two years for the recent Federal Reserve Actions to take effect on our economy. Analysts anticipate the ripple effects to reaccelerate the economy over the remainder of this year (particularly 3rd quarter) and into 2002.
- International Rate Cutting. According to Wednesday’s San Diego Union Tribune, “Central banks around the world have been adding to the liquidity gusher. There have been eighteen rate cuts this year by major countries, and a total of 49 worldwide… In the last half century, the U.S. market has always gone up within a year of cuts as steep as we’ve seen; when other countries join in, stocks are likely to rise even more.”
The employment marketplace is not much different than Wall Street. While stocks are down as we’ve seen in the recent bear market, the opportunity to buy at a good, low price is high, although invariably people are cautious because of the risk. Similarly, the loosening employment market has afforded companies the opportunity to attract candidates of higher quality ? because the demand is lower ? if they are willing to take a risk that the economy will change for the better. These recently laid-off employees are more flexible given the changing economy and a lot less demanding than only a few months ago. Those positions that were nearly impossible to fill four months ago are now showing some promise if the company still has the budget for them. Unfortunately, most companies are missing the recently loosened employment marketplace because they have enacted hiring freezes or slashed budgets. The companies who are most cautious now will be scrambling for candidates once the market changes (which looks to be fairly soon given the data). These companies will be hard-pressed to find the already newly employed candidates and will pay top dollar again to get them. Stay tuned to the economy and don’t be afraid to go out on a limb and hire those candidates who, for now, are a bit easier to attract and a lot less costly. Timing is everything, and now may very well be the time to BUY! <*SPONSORMESSAGE*>