Your Hiring Pulse report for August 2022
In July’s Hiring Pulse, we talked at length about recession jitters, interest rate hikes, layoffs, and all that stuff – and of course, the Great Resignation. This month, we’re very interested in seeing how the hiring market has responded to all of that stuff.
And here’s a sneak preview: it appears that things are actually normalizing to 2019 levels. And we’ll dig deeply into that in this month’s report, albeit with some lingering weirdness – if we go with the theme of “long COVID”, this whole thing could be termed “long disruption”.
But first, we want to tell you something important: we’re making a slight alteration in the way we look at data, specifically for the Time to Fill (TTF) and Candidates Per Hire (CPH) metrics. In past Hiring Pulses, we had measured trends based on jobs being opened.
For example, previously, if a job is opened in June, we would include that job’s data in TTF and CPH – meaning, the more recent jobs opened would naturally skew the data downwards in the latest months of the dataset because they haven’t had the time to build to normal TTF and CPH levels.
So, at Workable, we talked about this internally as a team, and decided on an adjustment – we would start looking at jobs based on the date the job was filled. So again, for example, if a job is filled in June, we would include that job’s data in TTF and CPH.
But since there’s an end date to all those jobs, we don’t have to worry about job data being skewed in recent months.
To be transparent, there’s a small catch that we do want to share – the dataset for jobs filled will be smaller than the dataset for jobs currently open, especially in more recent months. But there’s still a lot in this dataset to draw compelling conclusions from.
You saw a preview of this in the deep dive of last month’s Hiring Pulse. And this month is fully focused on jobs based on their hire date.
Let’s take the plunge!
How we’re looking at data
First, looking at SMB hiring data gives us an opportunity to look at benchmarks in the hiring landscape. But when the benchmark changes at unprecedented levels during these last two very weird years, it becomes an unreliable gauge.
So, it’s no longer helpful to look at the data YoY or even MoM. It makes more sense to look at rolling trends. Consequently, for the Hiring Pulse, we are looking at percentage increase or decrease compared with the average of the three trailing months. Want a more detailed methodology? Jump to the end and check it out.
As always, we look at the worldwide trends for three common SMB hiring metrics:
- Time to Fill (TTF)
- Total Job Openings
- Candidates per Hire (CPH)
Let’s start analyzing!
Table of Contents:
- Time to Fill
- Total Job Openings
- Candidates per Hire
- What’s going on here?
- The Hiring Pulse: Methodology
The three main highlights for this month’s Hiring Pulse are:
- We’re returning to before times – in other words, we seem to be stabilizing
- The job opening trend continues to trend downwards
- A surprisingly robust job market for July
1. Time to Fill
For this report, Workable defines “Time to Fill” as the number of days from when a new job is opened to when that job opening is filled. It’s important to understand that definition: jobs that remain open are not included in this graph as they don’t yet have an “end date”. Only the jobs that are filled will be included here.
Got that? Good. Let’s have a look at TTF based on jobs that have been filled from the start of 2020 through to the end of July 2022:
We’ll just keep beating the dead horse here: the last two and a half years are unprecedented times for society. That’s reflected in the wild ups and downs throughout, starting with the incredible drop in the TTF trend right when COVID hit. That’s a sign of SaaS companies rushing to hire en masse as they capitalized on the digital transformation boom early on.
But, when we look at the TTF trend in the early part of these last two years (i.e. February/March/April), TTF drops noticeably (-3.9%, -8.1%, -3.6% in 2021 and -3.4%, -3.1%, -3.9% this year).
This, after particularly positive trends in January 2021 (8.5%) and January 2022 (8%).
Rough conclusion from all this? Because we’re now looking at job data based on the date the job was filled, a job filled in January will have likely been opened a couple of months earlier. There’s a lot of activity involving numerous members of the hiring team – the recruiter themselves, maybe another HR representative, a departmental team member, an executive, and of course, the hiring manager.
And December is holiday time for many – which means delays in business processes including in recruitment. All of those job openings get pushed back to January the following year when everyone is back in the grind – therefore prolonging TTF. Mid-November to mid-January is roughly 60 days – much higher than the average TTF of 42, according to Industry Today (industrial/segmential fluctuations aside).
Another observation: the six most recent months (February through July) suggest a much more stable TTF trend than we’ve seen since the start of 2020. The times they are a-normalizing? We shall see.
2. Total Job Openings
Total job openings represent the total number of job openings activated across the entire Workable network.
So, let’s look at the raw job open numbers – which aren’t contingent on job opened/filled dates like TTF and Candidates per Hire.
These are just jobs opened in a given month and are a great indicator of the health of the economy. So, we can include July 2022 in this chart:
In July’s Hiring Pulse, we emphasized the anomaly that was the job opening trend for June – last month, it was -10.2% which is slightly updated to -10.1% in this chart. We suggested that economic jitters and business austerity measures were a factor in that drop in job openings compared with previous months.
That’s especially noticeable since June normally shows a positive uptick in job openings based on years past (2020 excluded, of course).
We’d hoped for the sakes of businesses everywhere that June would prove to be an anomaly. Well, July has entered the chat, and again, it’s a negative trend of -6% – slightly up from June, but still attention-grabbing.
Let’s look at what July looked like in previous years:
- July 2019: 7.2%
- July 2020: 49.5% (Like we said – we exclude 2020 due to the economic and social cataclysms of that year)
- July 2021: 5.7%
See there – generally positive trends. Except for this year. Same as what happened for June – where June normally looked robust in terms of job openings, only to see a negative trend in this year’s June.
Do we want to be nervous? Should we be nervous? Well… recessions are normal. They do happen. And businesses will respond to that with more conservative projections and austere practices. Let’s watch this space and see what August brings us.
3. Candidates per Hire
Workable defines the number of candidates per hire (CPH) as, succinctly, the number of applicants for a job up to the point of that job being filled. And now that we’re looking at jobs that are already filled up to the end of July rather than jobs opened, we’ll no longer see a skew downwards in the CPH trend in recent months.
Let’s look at what’s going on here through July:
What stands out with this one is the fluctuating CPH trend through the first seven months of 2022 with three positive-trending (February 0.5%, March 4.1%, and May 7.2%) and four negative-trending months (January -5.2%, April -1.8%, June -1.7%, and July -3.5%).
January is an easy one to explain away – as described in the TTF section, December will be a slower month for hiring, and that’s the same for candidate activity. When January rolls around, hiring teams will not have the same luxury of candidates to choose from, but because they really need to fill that job, they’ll just hire one and roll with it.
What about the negative trends seen in June (-1.7%) and July (-3.5%) of this year? We can add some perspective on those by looking back at May (7.2%). Pretty big drop from there forward.
Now, let’s look at what happened over the same period in the three years prior, with 2022 included for comparative purposes:
As stated above, 2020 is an anomalous year, with the spike in CPH very much attributable to the numerous jobs lost in the early part of that year after COVID set on the land.
But then, 2021 shows a huge drop in the CPH trend for May, and slowly rises for June and July.
Now let’s look back to pre-pandemic times: 2019 shows a positive May trend followed by a drop in CPH for June and July – and that’s the most comparable statistic to what happened this year. Is it worth noting that 2019 might be the most recent “normal” year for society and business overall? The lines for 2019 and 2022 in the chart above are visually similar.
Perhaps it is. And if that’s the case, then the fluctuations in the CPH trend for the last three months this year can be considered relatively normal if we’re comparing to 2019.
There’s a lot more data science to be conducted here, of course – but it’s worth thinking about as we move deeper into Q3.
What’s going on here?
Well, guess what? Despite widespread predictions to the contrary, the US job market is sizzling red hot. July saw 528,000 new jobs added – more than twice the forecasts of Wall Street. It’s worth looking at real job changes month-over-month in the chart below:
(If you’re wondering, April 2020 saw a negative change of 20.5 million jobs. Such a huge change that if we adjusted the chart to show it, the changes month over month in the rest of the chart would be not be nearly as discernible. So… we let it fall off the chart to where it belongs.)
In the US, we’re also seeing the highest-ever total employees ever, with a total of 152.54 million working in the country right now. Second-highest total in a given month? February 2020, at 152.5 million total employed. Third highest? January 2020, at 152.13 million.
Fourth highest all time? Um, it’s June 2022, at 152.01 million.
See what we wrote up there about things looking like 2019 and that 2019 was the last “normal” year? Plus, unemployment in the United States dropped to 3.5% – matching a 50-year low that was set just before the pandemic.
We’ll let Charles Schwab’s chief investment strategist Liz Ann Sonders take this one:
“There’s no way to take the other side of this. There’s not a lot of, ‘Yeah, but,’ other than it’s not positive from a market or Fed perspective,” she said. “For the economy, this is good news.”
But – sorry, Ms. Sonders, but we still like buts – 57.7% of the job gains for July are concentrated in four sectors: leisure & hospitality, professional & business services, health care, and government. What’s more – leisure & hospitality is still 1.2 million workers short of pre-pandemic levels.
As we know from experience (looking at you: dot-com bubble, 9/11, subprime mortgage crisis, and most recently 2020) – a good economy always has a half life. We’ve been predicting something bad in the future for a few months now – but the markets indicate otherwise. So far.
Ultimately, it’s good to be prudent. Have a contingency plan in place for whatever potential scenario may play out. After all, highs in total jobs were set just before the great COVID fall, and those highs are now being surpassed in the last two months. What goes up must come down? Maybe, maybe not.
We’ve quoted a former Workable executive in a past Hiring Pulse:
“First of all, make sure that you’ve got a number of contingency plans in place. Work out a lot of different scenarios which you are ready to deploy as the situation evolves. Secondly, don’t lose track of the more short-term or tactical objectives. Essentially, make sure that you also have a weekly plan on how you want to manage this.”
We’ll paraphrase with this: it’s always smart to be smart when managing a business, including in hiring.
Thoughts, comments, disagreements? Send them to [email protected], with “Hiring Pulse” in the subject heading. We’ll share the best feedback in an upcoming report. Watch for our next Hiring Pulse in September!
The Hiring Pulse: Methodology
To bring the best insights to small and medium businesses worldwide, here’s what we’re doing with our data: when looking at a specific month’s trend, we’re taking the numbers from that month and comparing it to the average of the three previous months – and showing as a percentage how that month looks in comparison.
For example, if July shows an average Time to Fill of 30 days for all jobs, and the monthly average for the three preceding months (April, May, June) is 25 days, we present the result for July as a 20% increase.
The majority of the data is sourced from small and medium businesses across the Workable network, making it a powerful resource for SMBs when planning their own hiring strategy.