The U.S. unemployment rate has spent the past year hovering just below the 4 percent mark, reaching as low as 3.7 percent … its lowest level since the go-go tech boom of the 1990s.
However, history suggests these levels of employment don’t last forever. Eventually, the jobless rate is likely to start ticking higher.
When the inevitable increase starts, you have to be ready to leverage the transitional situation. A rise in unemployment, while dangerous economically and hurtful to many workers, can offer an opportunity for companies primed to take advantage.
A Little History
Unemployment doesn’t tend to stay low for long periods of time.
The boom economy of the 1990s was followed by the 2001 Recession. A housing-led expansion eventually followed, bringing with it another dip in unemployment. However, the 2008 financial crisis came along and sparked the Great Recession … with a jobless rate that spiked to a level above 10 percent.
This figure has spent the last decade drifting lower, helped by the gig economy and a flood of people leaving the labor force.
How the Numbers Work
To understand how to take advantage of a rising unemployment rate, you should understand some details about what the figure measures. It doesn’t track the total number of people out of work. Instead, it uses survey data (actually calling and asking people) to estimate the number of people looking for work who haven’t been able to find a job.
Why not just count everyone? Because that doesn’t represent the true size of the labor market.
At any given time, there are large portions of the population that have no interest in finding a job. Retirees, students, stay-at-home parents – significant numbers of people content to stay out of the workforce.
When you post a job ad, you aren’t going to receive resumes from these folks. They aren’t interested in a position, so they don’t count in the unemployment rate.
On the other side of the spectrum, the unemployment rate is never going to reach zero percent.
Even in the strongest economies, there is going to be some churn. Layoffs, mergers, business failings, former students entering the workforce for the first time, former stay-at-home parents reentering the workforce after time away, people switching jobs mid-career – you’ll always find some people out of work.
Taking Advantage of Rising Unemployment
Higher unemployment means that some slack is working back into the labor market. With the jobless rate near decades-low levels, most people who want a job, have one. There just aren’t a lot of good people hustling for work.
As the unemployment rate rises, that means a higher number of talented people are available. You should be able to raise your hiring expectations … no more settling for subpar fill-ins while you hope someone better comes along.
Meanwhile, retention should become easier as well. A higher unemployment rate suggests that fewer jobs are available, meaning less competition for your more talented workers. It should allow you to build more stable and higher-performing teams.
You should also be able to take advantage of contract and freelance situations, building a bench of part-timers you can call on to become full-time staffers if they prove themselves worthy.
Navigating an evolving labor market becomes easier with a partner who has their finger on the pulse of changing trends. A high-performing recruiter, like DHR, will allow you to swoop in quickly to take advantage of the additional talent available in a rising unemployment environment.
Contact DHR today to find out more.