I was fortunate enough to have a 1:1 conversation yesterday with Nick Kirk, CEO of PageGroup in our NYC office.
Nick gave a Town Hall presentation to our entire NYC office about the state of the current job market, as well as shared some perspective from his career seeing the cyclical nature of the economy and the hiring industry in particular.
As a financial services recruiter over the last 2 years, I have seen the market completely change from a strong & fluid candidate driven market, to the current market that as Nick put it, has incredible "friction" between candidates and employers.
Here are my 3 take-aways from Nick's presentation:
The job market is cyclical, and acts as a lagging indicator to the economy.
Hiring Manager's standards increase when economic outlook is uncertain.
The hiring landscape has become increasingly hyper-specialized.
The job market is cyclical, and acts as a lagging indicator to the economy.
One key anecdote Nick shared was a discussion he had recently with banking executives discussing the current state of their business and the economy.
When the job market was incredibly strong in financial services in 2021 and 2022, interest rates were low, which lead to a large increase in M&A activity. M&A activity is one of the core drivers for growth in the banking and financial services industry, so with such a high amount of deal activity, most firms had no choice but to hire to keep up with the demand for their business.
As the Federal Reserve raised rates at a historic pace over the past year to fight inflation, this caused M&A and deal activity to grind to a halt.
The bright side?
Inflation has been cooling.
Rates are expected to stabilize.
And there is a bubbling desire in the markets to pick up M&A activity since it has been put on ice for the past year. (A lot of pent up demand)
Hiring Manager's standards increase when economic outlook is uncertain.
In 2021 & 2022, since the market was so hot, hiring managers had no choice but to hire. They also had less candidates to choose from, since many candidates were not on the market long before getting multiple offers.
Additionally, there was more certainty in the economic outlook. We had a friendly interest rate environment, and were on the recovery from the pandemic. Companies felt confident with the hand of cards the economy was dealing them, so they were pushing their chips into the middle and playing.
In 2023, the majority of economists on Wall Street were calling for a recession as the Fed hiked rates due to generational high levels of inflation. Firms began to layoff many of the same employees they feverishly hired just a year prior.
However as the dust has settled with the headlines of layoffs, interest rate hikes, and inflation, we still haven't seen the harsh recession many warned about.
This has caused employers to scratch their heads over what to do from a hiring perspective.
The uncertainty has ultimately lead to hiring standards to increase. A candidate that checks 8/10 boxes a year ago would have been hired.
But now?
The hiring manager is only hiring a 10/10 candidate.
This also can be seen in the data of new job openings vs actual hired candidates over the last few years.
Look at how many job openings we have, but how little hires employers are actually making:
The hiring landscape has become increasingly hyper-specialized.
Following Nick's Town Hall, I was able to speak to him directly and get his perspective on some of the changes he has seen in the labor market over the past 30 years.
One observation he shared that I found interesting was that the market has become hyper-specialized over the last decade.
It seems like every time you go on LinkedIn, you are seeing a new job title you have never seen before. Nick actually referenced in our conversation he would be curious to see what the data looks like for the growth in job titles in the U.S, and I was able to do some research to showcase this trend:
The Growth in Job Titles:
The U.S. Bureau of Labor Statistics puts together the “Standard Occupational Classification” tool, which federal agencies use to classify workers into different categories into the workforce to then do research and analyze the labor market.
The Bureau refreshes the tool every ~8 years, and dates back to 1980. The latest data was collected in 2018, they will likely again refresh in 2026.
In 2000, the SOC report published 820 unique job titles that American's could categorize themselves. The 2018 report reflects 867 unique job titles, showing a 6% increase since the turn of the century.
What this data does NOT capture is the many different ways that companies are describing roles these days. (The job's might be the same, but the titles are getting more complicated.)
While LinkedIn has not published the number of unique job titles on their platform, anecdotally I have certainly seen the length and specificity of job titles continue to rise on LinkedIn while looking for candidates on my searches.
Summary
I asked CHATGPT to summarize my blog I wrote into 5 bullets if you would prefer to just read the high level summary of my post:
Cyclical Market Reflects Economy: The job market's cycles mirror economic trends, lagging behind shifts like interest rates and M&A activity, impacting hiring demand.
Economic Uncertainty Elevates Standards: Economic uncertainty drives hiring managers to raise standards, shifting from easy recruitment during growth to selective hiring amidst uncertainty.
Specialization Dominates Hiring: Job market evolves into hyper-specialization, witnessed by an increase in unique job titles, reflecting the intricate nature of modern roles.
Interest Rates and M&A's Ripple Effect: Example from banking sector shows how interest rate changes influence M&A activity, directly affecting hiring dynamics in financial services.
Adaptive Hiring Landscape: Acknowledging current trends, the blog suggests that practices like specialization and hiring standards may evolve with changing economic conditions and workforce dynamics.