The unemployment rate has been historically low in recent years; the figure for January 2020 was a mere 3.6%. While this is excellent news for economists, it can present some challenges for employees who have vacancies to fill.
What is a low unemployment environment?
The unemployment rate experiences natural highs and lows that are connected with industry across the nation. When businesses are performing well, and more workers are in demand, the rate drops. When demand and performance decrease, the unemployment rate increases. The unemployment rate is also impacted by the productivity of the labor market, wage fluctuations and inflation, and the competitive climate.
When the unemployment rate is low, individuals across the country often have more money in their pockets, and business performance is up across nearly all sectors. But can a low unemployment rate also create complications?
Turns out, hitting a sweet spot where the unemployment rate isn’t extremely high or low is often the best balance for addressing all of the financial, economic, and social situations that may arise when the rate is too high or low.
When the rate is very low, such as it is currently, we see many employment concerns and challenges emerge—particularly for employers—which include:
Limited hiring options:Top candidates in their fields are in high demand. They don’t remain in the job market for long, and when looking at prospects, they’re in a position to favorably negotiate terms.
Increased cost:Securing qualified candidates, if you’re able to, may cost more due to heightened salary expectations.
Operational concerns:If your company is growing or in a period of transition, internal personnel may struggle to handle operational demands, including those related to recruiting.
Increased attrition rates:With many job openings and fewer workers, current employees may feel more confident in seeking out other opportunities.
In addition to this, small and mid-sized companies struggle even more during low unemployment environments, simply because they often lack the resources to offer competitive wages or benefits. They also may lack the visibility of larger companies and have a much smaller referral network to reference when seeking qualified candidates.
The fact of the matter is that no matter your company’s size, hiring and retaining qualified employees during a low unemployment environment can prove to be more challenging than it is when the unemployment rate is average or high.
Strategies for Employers
To compete in an employment climate that has low unemployment, employers—and particularly small- and mid-sized companies—need to use every advantage they can to ensure that they’re attracting and retaining the best employees available.
Following are a few tips that can help employers successfully navigate their way through this process and hire a qualified candidate.
1.Consider your offer.
Offers to qualified and desirable candidates are likely to be competitive. If you can, increase your starting wage slightly. If that’s not a possibility, you may want to consider getting creative with benefits. Many job seekers, and particularly millennials, value flexibility and the ability to further their careers more than increased pay. This means that the addition of telecommuting options, training opportunities, or student loan repayment plans could give you that increased employer desirability necessary to edge out competitors.
2.Don’t forget your current employees.
In many instances, employees leave because they don’t feel valued. This can be particularly true if your company is hiring new employees at a higher rate than they have in the past. In this scenario, many experienced employees who have been with you for years could potentially make less than their brand-new counterparts. Make sure you’re treating your current team well and are working to meet their needs.
3. Don’t burn any bridges.
Every applicant represents a possibility to be a future employee, even if they aren’t a good fit for a current position. During a low unemployment environment, it’s crucial to maintain relationships with prospects and develop a rapport with them. This action will make it much more likely that you can successfully sway them onto your team when you have a compatible position open.
4. Put your culture on display.
Company culture is a critical component of overall job satisfaction. If you have a great culture, leverage it. Looking forward to going to work is a perk that many prospects simply can’t pass up. If you can get the word out about being a great employer, candidates will be naturally drawn to your organization. Plus, if your employees are happy, they can create quite a buzz among their acquaintances in the industry, which can be very compelling.
5. Use external resources.
Another method for getting a leg up on the competition is by employing a company to help you find and recruit a qualified candidate. They often have the expertise to know what competitors are offering and can put you in the position of knowing exactly how to successfully hire, even in a low unemployment environment.
The Low Unemployment Environment for Job Seekers
Generally speaking, a low unemployment rate is good news for job seekers, since the competition to attract and retain talent is fierce. If you’re seeking employment, and the unemployment rate is low, it’s a great idea to keep a few things in mind:
Go to more interviews than you might otherwise. You shouldn’t jump on the first offer that comes your way. It doesn’t hurt to take a little time and assess all of your options before accepting an offer.
Connect with a recruiter. These individuals are skilled at what they do and can often save you time and allow you to reach out to firms on a larger scale, thus exposing you to many more job opportunities than you might otherwise encounter.
Speak to workers who are currently employed by your desired employer. If you really want to join a company, you can reach out to their team members and start forging relationships. This process may be easier than it would be in a high-competition environment.
Consider your priorities. If you truly want a unique company culture, need a flexible schedule, or are looking for specific benefits, now is the time to ask for it. You’re in a strong position to negotiate, but it’s important to keep your requests reasonable.
The low unemployment environment is certainly putting pressure on businesses across the US, but using all of the available tools at your disposal to hire qualified employees and retain current ones is the best way to get through this market successfully.