Feature
If you are or know someone looking for candidates or a job today, you won’t be surprised to hear that something's seriously off in the job market.
Unemployment is still near historic lows (4.1% according to December data from the Bureau of Labor Statistics). There are a lot of job openings — not the highs of 2022 but there are a million more open jobs today than there were in late 2019. As you might expect, companies are still scrambling to hire.
You'd think candidates and employees would be feeling pretty good, right? But talk to anyone out in the market, and you’ll know how wrong that assumption is. Many are more anxious about job security than ever.
This is the talent paradox in action: Companies can't find people, and people don't feel like they have the upper hand. Employers are pulling their hair out trying to find qualified workers. Workers are pulling their hair out trying to find decent jobs. Everyone's frustrated and looking for answers.
So, what's the deal?
A Market Tight on Talent and Confidence
Let’s take Connecticut as an example. Unemployment in the Constitution State is below the national average, at 3%. Yet, the state has 75,000 open jobs — 7% more than before the pandemic.
In an address at a meeting hosted by CBIA, Indeed’s head of revenue and growth, Jack Mahoney, said: “Low unemployment is excellent, but for everyone in this room, that poses a challenge. It makes it so much more difficult for you to hire the roles that you need.”
Consider the tech industry: The industry as a whole still has thousands of openings. But recent layoffs at big-name companies have sent shivers down everyone's spine. Even people with jobs are worried about what's next and are hesitant to be in a “last-in, first-out” sort of situation.
A significant number of employers are struggling to find and hire talent. SHRM research found that 77% of HR professionals reported difficulty recruiting for full-time positions over the past year.
Normally, a tight labor market like this would mean job seekers are in the driver's seat. But perception doesn’t match that reality.
One survey found that over 90% of US job seekers believe the job market is competitive, and 63% describe it as very or extremely competitive. That same report shows that 79% of job seekers experience some level of anxiety, and 20% report extreme anxiety.
The AI Factor: Will Robots Take Our Jobs?
Is AI the problem? Last year, the World Economic Forum covered this emerging attitude of “FOBO” — Fear of Becoming Obsolete — due to new AI capabilities. Yes, they're making a lot of people nervous, and yes, it’s a real concern.
Younger workers, especially, are worried that their skills will be obsolete tomorrow. Gen Z is particularly skeptical: 42% are afraid AI will steal the parts of their job they actually like.
According to Indeed's Mahoney, the data tells a different story. Indeed researchers have evaluated nearly 3,000 work skills across millions of job postings and found that generative AI is likely to displace less than 3% of jobs.
Yet fears still remain about AI’s role in shaping and affecting employment in both the near and long term. But this is a story about more than just AI.
Recruiters and Employers Struggle to Meet the Moment
One big problem is some of these companies are still hiring like it's 2015.
Job descriptions are bloated with difficult-to-fill requirements, and candidates are hesitant to apply to jobs where they may not be a close match. Mahoney said job seekers today feel they need 50% to 80% of the qualifications listed to confidently apply for a job.
Meanwhile, the average time to hire, about 43 days, hasn’t moved much in the past decade. I know recruiters love to hate time-to-hire as a metric but as a business, being able to respond quickly to available talent instead of making them wait a month and a half through a terrible process is critical.
Another issue: Workers aren't feeling the financial security you'd expect in a “strong” job market.
According to Vaco’s Q4 2024 Talent Pulse Report, 41% of respondents reported feeling extremely confident in their ability to boost their financial situation in the next six months, which is down from 44% in both the second and third quarters of 2024.
That same research showed that 30% of respondents reported not feeling confident that their financial status was improving.
For those who have moved up, so-called “dry promotions” are on the rise. That’s a promotion without a subsequent salary increase. Data from Australia shows that nearly a quarter of people surveyed reported seeing a colleague promoted without a salary increase in the past 12 months, and 16% said they had personally experienced such a “promotion.”
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What Can We Do About It?
This isn’t a problem with a single fix, but there are solutions.
Employers that want to hire and retain talent need to rethink their approach. While I think the hyperfocus on ghost jobs is overblown, that doesn’t mean there aren’t problems. Employers should be making job postings realistic, speeding up hiring decisions and offering real growth opportunities instead of just handing out unpaid extra work under the guise of career development.
Hiring managers should also consider shifting their focus toward skills-based hiring rather than rigid credential requirements. Skills-based hiring can help expand talent pipelines and lead to more successful hires. Companies that drop unnecessary degree requirements often find that they can fill roles faster with high-quality candidates who have the right experience, even if they lack traditional qualifications.
For job seekers, confidence will come from adaptability and comfort with emerging technologies. Some of the confidence will come as the market adapts.
“Today, we’re finally starting to see a shift in people open to exploring new opportunities,” said Kevin Jeewan, managing partner at Vaco. “With interest rates falling and business investments on the rise, job seekers are regaining confidence in the market and their ability to secure new opportunities.”
Beyond individual responsibility, policymakers and business leaders need to step up, too. Incentives for workforce development programs and investment in employer-led training initiatives can help bridge the skills gap.
A Boost of Confidence
The labor market is more complicated than a simple supply-and-demand equation. It can also be affected by people's feelings. I believe it ultimately comes down to trust. Until workers and candidates feel confident and secure, employers will keep struggling to fill those open positions.
Hiring alone can’t solve it, though. The real challenge is creating a work environment where people actually want to be. That means fair pay, clear career paths and processes that don't treat candidates and employees like they're disposable.
If companies want to fix their talent problems, the most important part is to pick a direction and start. The time for waiting and seeing has passed.
Read more about labor market trends here:
6-Month Recruiting Processes Shouldn't Be the Norm — Employers are getting a bad rep for their recruiting process, and job-seekers are calling them out publicly. Here’s how to avoid the backlash.
Why Skills-Based Hiring Still Is More Dream Than Reality — Skills-based hiring has been lauded as a game-changer in recruitment, one that would provide jobs and fill skills gaps. But it may be easier said than done.
Are Jobs Safe in the World of AI? It’s Not Clear — The idea that AI is coming for jobs is starting to look more and more realistic — but what businesses say they want to do isn't always what they end up doing.
